Housing Benefit & proceeds from sale

AndyPandy76

Hi all,

I started renting in October and was initially awarded HB which was what I was expecting. I have always been totally honest and open with them that I was selling my house which was due to complete in November but I would be using any proceeds to clear my debts. At the time they told me that would be fine once completed the funds would be disregarded until I got the debts cleared and obviously I would be showing prove of this.

Got a letter asking me to forward them details of the proceeds and bank statements all of which I provided as well as all my up to date debt statements at the start of January. I then received a letter to say my award was suspended while they re-assess.

Today I received a letter to say they had over paid me ????? I am confused does anyone know what the procedure is can I get this money disregarded while I make the offers of settlement to my creditors????

Makes me feel so sick. We had to sell our house due to my husbands ill health so we could clear the mortgage and our debts. We are now renting and can't afford it with out the HB.

TIA for any help.

Topcat1982

How long has the money been sitting in the account? Did you not just clear the debts straight away?

Housing_Benefit_Officer

Proceeds of a house sale sitting in a bank account will be treated as capital - the only time we would disregard it is if you were waiting to purchase another property. While the capital is sitting in your bank account it will be treated as capital irrespective of you waiting to make arrangements with your creditors.

Caz3121

Capital from a property sale can be disregarded for a set period if the money is planned to be used for buying another property
were these debts in default/required to be paid earlier than the schedule? If these were paid off before they were due then the decision maker may still treat you as having the money. If they were with debt collectors etc then it should be ok
Did you get something in writing to say they would allow debt repayment as an allowable spend?

pmlindyloo

You can pay off debts with any capital and this would not be treated as deprivation of capital (diffferent rules for HB!)

However, the OP hasn't done this. The capital is still sitting in the bank account whilst she makes settlement offers to her creditors.

OP, you are going to have to treat this as another debt.

Depending on the amount of capital you have, you might want to consider visiting CAB and ask how best to use your capital to pay off your debts.

AndyPandy76

Thanks for the advice so far.

So if they tell me I can not use the funds to pay off debts can I then transfer some of the money into my childrens names so it is then disregarded.

I have about £12000 left from the sale . I am so annoyed about this as the reason we sold the house was due to my husbands ill health we were getting no help with the mortgage and debts were building so it made sense to sell, clear the mortgage and make settlement offers to my creditors (total debt about £30000). Renting made sense as we would be entitled to HB ...... So has this all been a waste of time am I going to end up worse off as I wont be able to afford my rent with out HB.

They definately told me the proceeds could be disregarded.

HappyMJ

AndyPandy76 wrote: »

Thanks for the advice so far.

So if they tell me I can not use the funds to pay off debts can I then transfer some of the money into my childrens names so it is then disregarded.

I have about £12000 left from the sale . I am so annoyed about this as the reason we sold the house was due to my husbands ill health we were getting no help with the mortgage and debts were building so it made sense to sell, clear the mortgage and make settlement offers to my creditors (total debt about £30000). Renting made sense as we would be entitled to HB ...... So has this all been a waste of time am I going to end up worse off as I wont be able to afford my rent with out HB.

They definately told me the proceeds could be disregarded.

You cannot give the money to your children. You'll still be considered as having it.

Clearing the mortgage on sale is compulsory you wouldn't be able to sell if you didn't clear the mortgage.

You can also clear all of the debts you have too so get them cleared ASAP and it won't continue to affect your benefits. The quicker you get those debt repaid the sooner your benefits will go back to normal. You can use the money in the meantime to pay the rent. It'll mean your creditors get less so it's now in their interest to agree to a settlement before the money runs out and they get nothing and you get full benefits.

They allow you to repay the debt as the money was probably borrowed to maintain or improve the property and now you've sold the property then it's sensible to use the money you've got from the sale to repay the debt. That's probably why they said "could" be disregarded.

Topcat1982

AndyPandy76 wrote: »

Thanks for the advice so far.

So if they tell me I can not use the funds to pay off debts can I then transfer some of the money into my childrens names so it is then disregarded.

No don't do that. It's deprivation of capital. Pay off the debts as you told them you would.

You don't say how long the £12k has been sitting there. You may have to pay some money back but it won't be much