5 month backdated DLA goes into OD covered by repayments insurance!!!!!!!!

Phonix

AH!

My father's backdated DLA payments have gone into his indebted bank account that was covered by insurance.

In January he filled in the papers for his repayments insurance on his £2500 debt. Unfortunately he asked the dwp to put his disability payments (he's terminally ill with cancer) into his halifax account which is covered by repayments insurance.

I'm concerned he won't be able to get this money back now. What recourse do we have if he can't?

jonesMUFCforever

Not sure I understand what is going on here. Are you saying that your father had / has insurance to pay out on a current account?
Or is the debt a loan with repayments coming from another account.
If he filled in papers in January why is the debt still o/s in May?
If he has 2 seperate a/c's I cannot see that a bank has recourse for funds from one a/c to another unless it is secured borrowing or the bank has it in writing that they can transfer from one a/c to another to clear a debt.
eg You bank at Bank A with a £1000 overdraft and hold a savings a/c with say £1500 in it, Bank A cannot touch what you have in the savings a/c to recover the o/d unless there is a written agreement to that effect.

Could we have a little more info here please.
Eric

Phonix

The bank OD was an insured debt. So when he became ill he filled out the insurance papers to cover the repayments on this debt.

The payment is form the department of work and pensions, it's his entitlement to disability living allowance. He is terminally ill so cannot get better, we have been helping him out with living costs whilst this claim has been going through. It has taken ages.

about 14x £87 went in.

So recently he recieved a backdated payment, and the whole lot went into this overdrawn account and cleared his debt. This is not what the money is meant for, it's supposed to help with his disability living costs.

There is only one bank involved here, the payment is benefit from the dwp.

The question is do we have any recourse to get this money back?

The payments insurance is with halifax.

MarkyMarkD

I still don't really understand what you are asking here.

I don't know the terms of Halifax's overdraft protection insurance, but it's probably similar to others. Smile's (for example) says that the insurance will pay the insured 10% of their overdraft limit (max £500) a month whilst they are unable to work.

If the insurance claim has been made successfully, Halifax's insurers should have been paying this from January (presumably) to date.

I don't know the numbers.

But if the overdraft was £2,000 and the limit was £2,000, they would have credited 10% x £2,000 for about 5 months = £1,000. The account would still be £1,000 overdrawn when the DLA payment went in.

And then the DLA payment would have (more than) cleared the rest of the overdraft.

There's nothing wrong with that.

The overdraft protection payments would still continue in future until the 12 month eligbility period is up, unless the terms of Halifax's insurance differ materially from Smile's.

"Do we have any recourse to get this money back"? No. Because he owes the money to the bank, at the moment. All he is insured for is a monthly amount, not clearance of the full debt.

Most protection insurance is like this - otherwise people who got ill or unemployed for a few days would expect their debts cleared in full. That's not how it works.

Hope that helps. MMD

welf_man

I think I understand, Phonix - the insurance would have covered the o/d, but the DLA was paid in so there was no o/d, so no more insurance payments and the DLA was used up.

I'm afraid I don't think you can do much - the DWP was just following the instructions they were given, and insurance companies aren't renowned for empathy. You could try explaining the situation to the insurance co., but I don't hold out much hope - sorry.

Mel.

MarkyMarkD

It all comes down to whether the insurance specifies paying off the o/d (unlikely) or paying a fixed amount towards it per month (more likely). If you can let us know Halifax's specific Ts & Cs (or if someone else has access to them) we can answer more informedly.

pandas66

I think you should also have given different account details to dwp and then it wouldn't have been used in effect to clear the debt.

Phonix

Yes I know.

No harm meant in this comment but bear in mind the guy is terminally ill with cancer and these sorts of things are at the back of his mind. In a way he's was fortunate to have our support throughout and because of this we are the ones who've lost out because of this. However we don't blame him for it at all.

I apologise for being a little histerical about this by approaching the forum for advice without waiting until the matter is dealt with through the appropriate channels.

I think he was ok with it because he expected a Giro.

MarkyMarkD

No, we appreciate that he's got bigger things to worry about (and you for that matter). But it would help to understand the terms of the Halifax protection insurance, as you may be worrying but may still get the money - just over the next few months.