ESA Supprt Group & Dealing with Debt

MrStarship

My girlfriend is on ESA Support Group & received HB and she ows around £8500 in debt. I'm willing to pay that off, but unfortunately she has around £3000 in a fixed ISA that she has built up over her lifetime.

I don't want any payments I make to compromise her benefit entitlement. I have suggested the two ideas to her:
1) She used her Credit Card that she has barely used to pay off the debt. And then I make a transfer directly to her credit card immediately, so money does not go in to her bank or savings.

2) I pay the loan company directly.

I'd prefer option 1.

I don't expect her to pay me back, but I can't watch her go on as she has enough problems already.

BigAunty

I suggest you get her to post on the Debt Free wanabee forum which has very many sympathetic members and they often recommend that a person contacts Stepchange, a free debt management charity.

You may find that she will be able to get some of her debts written off or reduced to token sums because of her low income. Many of the debtors on that forum feel much better when they stop denying their problem and get assistance from professionals to manage their debts, the pressure lessens and their pride returns.

This will save you the risk of your financial support causing relationship problems and obliges her to take action to resolve her own debts, meaning that she takes full responsibility for them and learns a lesson.

Being a white knight to her may not actually do her many favours in the long-term. I say this as someone who watched a close friend continue to sink into debt and avoid taking any action whatsoever because her nearest and dearest would pay her creditors and subsidise her living expenses. As she didn't feel any of the strain associated with living above her means, she continues to do so.

The MSE website has an excellent downloadable budget planner. It also has a booklet on debt and mental health (I know that you haven't cited her condition but it's helpful for people on benefits or with health issues). The Direct Gov website has excellent information on debt management, too.

rogerblack

MrStarship wrote: »

1) She used her Credit Card that she has barely used to pay off the debt. And then I make a transfer directly to her credit card immediately, so money does not go in to her bank or savings.

2) I pay the loan company directly.

I'd prefer option 1.

I don't expect her to pay me back, but I can't watch her go on as she has enough problems already.

Addressing solely the benefits side of this question.
Assuming for the moment she's on contributions based ESA in the support group.
Payments of capital don't matter - she can have millions in the bank and still be entitled to contributions based ESA at the same rate.
Either option is just fine.

If she's on income-based ESA - and you are not living together:

On option 1 - capital for ESA purposes is total assets - debts don't count.
So, a particularly harsh DM might take the view that by paying the debt when she diddn't have to - she is depriving herself of capital - the capital she got by taking a loan from the credit card.
You paying this off is not an issue.
Option 2 is certainly 100% safe from this respect - as she never even had the opportunity of spending it on something else.

If she's on income based benefits - if you move in together - your income and savings are part of the household savings that go into her assessment.

MrStarship

Hi, thank you for your help. I think I will go with option 2 and pay loan company though my bank directly and save the unnecessary inconvenience that option 1 would present.

[Deleted User]

if she has missed payments on the debts she maybe able to negotiate final settlement figure lower than the outstanding debt