Universal credit and personal loans

charlie246

Hi, I will be making a claim for universal credit and am currently owed £9500 from a friend, this is a personal loan and we have nothing in writing, will I be asked about any money owed to me when making the claim? I currently have £7000 in my bank as savings, if she pays me back it will be by bank transfer. It is possible however that she will not be able to pay me it back as she has been ill.

If I mention the loan will I be expected to pursue it if she doesn't pay, or would I be able to accept that she can't pay and not pursue it further.

Many Thanks

[Deleted User]

After £6000 means tested benefits are reduced by £1 for every £250. Over £16000 you get nothing.
I'm not sure about someone owing money its not a question I can remember seeing on here before, but at a guess I would say that it won't be counted until repaid.
Hopefully someone will be around tomorrow who knows more than I do about this.

huckster

Application would not ask about such gifted money you have given to a friend. Without any loan agreement, you have no guarantee it would be repaid. It is a matter of honour between friends. Yes in theory, you could go to court saying there was a verbal contract, but that would be difficult.

In regard to benefits, you have to be careful if the loan has been made within say 6 months of applying for benefits. This is because if you were ever asked to supply Bank statements and this transfered money was seen, then questionw might be asked i.e have you hidden this money, so you later become eligible for benefit payments.

charlie246

Thanks, The loan was made more than 6 months ago.

I was wondering whether they specifically ask about money that is owed to me, and whether money owed to me from a loan would be regarded as an 'asset'? I am worried that when, all being well, I will be paid back later this year at a rate of nearly £2000 a month for 5 months this will look as though I have extra income which had not mentioned in the application.

pmlindyloo

This is quite a difficult one but it is worth remembering that the overriding principle here is 'did you give away money to gain benefits or increase benefits.'

I say' gave away money' because basically that is what you did.

So when you gave away the money had you any idea that you would have to claim UC/benefits or indeed were already claiming benefits (including tax credits) and were transferred to UC because of a change of circumstances? If you were in this situation then they may consider deprivation of capital.

If you have never claimed benefits and when you gave away this money had no idea that you would have to (no idea about redundancy etc etc) then they may not accuse you of deprivation of capital.

I would never trust the idea that they will never find out about the gift. The DWP have wide powers and as you say, when it is paid back they will want to know where it has come from.

So what are your options?

Confess to the loan explaining all the circumstances and a decision maker will make a decision about the deprivation of capital issue.

Speak to your friend, explain the circumstances and see if they can come up with the money somehow.

Ignore it and hope the gift never comes to light.

pmlindyloo

It might also be worth considering your personal situation and why you are claiming UC.

So, for instance,,,, are you single and just lost your job? If so you might be eligible for contribution based JSA which comes out of the scope of UC and is not subject to the capital rules.

Would you mind sharing?

Ames

Once she's paid you back your savings will be above £16k and entitlement to UC will end. You need to be very careful with your spending from now on as anything you buy from savings is likely to be considered deprivation of capital.

charlie246

Thanks for the replies.

To clarify my situation, I gave the loan in several amounts between November 2016 to August 2017.

I am going to have to apply for UC because I had been getting child and working tax credits but then my circumstances changed when my partner moved out of the house and when I informed the working tax credit office they told me to apply for UC instead. I am self employed and work part time on a low income and look after 2 children. In Oct 2016 I sold a piece of land so between then and now my savings went from about 28,000 to about 7,000 now. I'm not sure if this would look like deprivation of capital?

Ames

I think you need to get face to face advice from Citizen's Advice.

On the one hand deprivation of capital is about intent. If you didn't know that you'd be going on benefits then you can't have deliberately deprived yourself of capital in order to be eligible for benefits.

On the other, £21,000 is a lot to spend in a relatively short space of time.

It should be straightforward for someone who knows what they're doing to explain that it wasn't DoC, but unless you're very confident about benefit law and terminology you probably don't want to do it yourself.

Plus, as I said, there's the situation from now onwards to handle.

Moira44

I have just lost all of my income (self employed) and my husband's small business has it even worse. Fortunately I have just managed to get a personal loan from the bank to help us cover the next few months out goings.  However this means £10,000 has just come into my account.  Because this is credit in my account - does this count as savings as hence effect us claiming for universal credit? Thanks  

huckster

Declare it and let DWP decide if it can be disregarded.
Read parts H1 and H2 of the guide linked to.

https://www.gov.uk/government/publications/advice-for-decision-making-staff-guide