Loan do I need to inform

dreamscome

Hi

If I accept a loan for £10,000 from a bank which would be to pay debt, get a new bathroom and start my business (I'm on the NEA scheme) would I have to tell any of my benefits? - I'm just going onto ESA and I get CTC HB council tax reduction and DLA.

Thank you, I'm hoping I won't as it isn't regular income and actually won't be in my bank longer than a week but I don't want to get in trouble if I need to tell benefits - which I will

You have all been so helpful before with my last question so I'd really appreciate it if someone could point me in the right direction as some people are saying no as it's under a threshold and won't be classed as savings as it's going straight out again but I want to make sure before I go ahead with it.

Thank you

Caz3121

is it income based on contribution based ESA?
It will not make a difference to contribution based ESA, CTC or DLA but may impact housing benefit and council tax reduction which are both reduced by savings over £6k
This will reduce your benefits by £1 per £250 over the £6k and then the decision maker will decide what is normal spending...you may be fine with a new bathroom and may be ok with repaying debts if they are currently in arrears and they are passing to debt collectors/court etc but they may not count spending on clearing debt early.
You need to have a look at "deprivation of capital" and "notional capital"

I am actually surprised that the bank has offered you a £10k loan with existing debt and only benefits for income when many people on here really struggle getting accepted for loans. Is it at a reasonable APR?

pmlindyloo

I am also surprised that you are able to get such a loan.

I agree that paying off debt would not be allowed and they would treat it as notional capital (as if you still have it) unless the debt was at the stage already mentioned by Caz.

as regards the bathroom and money for starting self employment this may be disregarded. It might depend on the terms of the loan - ie. if it was specifically given for these purposes. (repairs/business start up)

Some useful information on here https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/337673/dmgch52.pdf (52548)

but ultimately it would be up to a decision maker.

cifpower

How do you intend to repay a £10k loan on benefits? I'm taken aback that a bank would actually lend that amount to you.

TELLIT01

Any change of circumstances should be reported immediately. It may or may not affect your entitlement to benefit. There are too many variables to give a simple 'Yes' or 'No' answer.

dreamscome

Hi,

Thank you for all the replies, I don't have any debt I only owe £900 on my cc which I had no interest etc on for 29 months so not urgent I clear it and I can clear it by then so not a huge issue just thought I would if I could use it . The apr for the loan is 11% so it's something I need to think of seriously although the NEA loan they are offering is 10% apr anyway. I'm not rushing into this as I have no debt and it's not a need it now I can wait and start smaller with the NEA loan and save for my adaptions to bathroom.

The loan is from a bank which lend to DLA and I was given details of from disability living centre but stupidly I didn't ask about benefits.

I've called the benefits contact centre who will call me back tomorrow am as they couldn't answer my questions and seemed to think a personal loan wouldn't affect anything but the team who can answer me defiantly will call me tomorrow so I will know then. Thank you for all the replies I will wait and see what they say to if I go ahead or not

dreamscome

Ahh ok looks like £6000 maybe better as won't affect anything, I will call the loan company this evening and ask about apr rate repayment etc for £6000 loan and do my bathroom and business and pay off cc as I already was looks like that would make it easier as wouldn't change anything. I'm pretty sure I was told wrong thing through benefits office so will call the company now and find out rates etc thank you again

[Deleted User]

couple of points,the apr on a 6k loan will be higher,do the bank know some of the loan is for business purposes(if they did they wont give a personal loan) as for benefits if the £ will only be in your account for a few days it may not cause any issues

Mersey_2

As others have indicated, individuals with assets of £16k+ are not entitled to means-tested benefits and those with between £6k-£16k of assets are only entitled to tapered JSA/ESA etc.

However, a recent decision of the Upper Tribunal may assist you, in that net assets may be regarded as assets.

Effectively, this decision means eg if an individual had assets of £15k but a linked loan/overdraft of £10k they would be deemed to have £5k of assets and qualify for full income-based JSA [and in theory LHA/HB, CTB, free prescriptions etc as JSA(IB) is a gateway benefit].

http://www.administrativeappeals.tri...w.aspx?id=3196

Quote:
the documents produced to the Upper Tribunal clearly showed that the agreement between the claimant and the bank conferred a contractual right on the bank as creditor to debit at any time without prior notice any of a customer’s accounts with it which were in credit with funds sufficient to reduce or repay any indebtedness which that customer might have to the bank (paragraph 15); 3. the “market value” of the balance in the Bonus Saver account was its net value after deduction of the amount of the claimant’s overdraft in his Student Additions account. Thus for the purposes of regulation 111, at the relevant time the market value of the claimant’s Bonus Saver account was £5,705.19 and no tariff income was applicable to the claimant in the calculation of his entitlement to income-based jobseeker’s allowance
The exact terms and conditions are important - if the bank has the right to offset at any time, then it may well apply.

If they cannot do this until some time in the future, when the debt falls due, it would not. (This ruling only applies to JSA directly, though it may also apply to other benefits if the legislative underpinnings are the same)

Mortgages don't count as linked debt, before anyone asks!