Help universal credit question

karenodo

Partner and I have used the calculators and have discovered we are entitled to some universal credit. We have 2 children, OH works full time, I’m at home with my baby daughter and son. OH has in the last few weeks taken out a loan £17,000 to pay of an existing loan which was costing too much (higher APR) he was going to wait to pay it off until his next payment later in the month. However I am now terrified that UC will consider this loan money capital which a) will take us over the 16,000 max limit and b) if he now uses it to pay his existing loan they will consider it deprivation of capital. We haven’t yet applied for UC and I think it would confuse everything while it’s still in his account, so he’s going to pay off his loan tomorrow. I can’t find any clear guidance on whether money from a loan is “capital” and whether using the loan to pay off existing debt would be considered depravation of capital. The loan money is technically not his so not sure how it could be considered capital, but it has been in his bank a few weeks! Anyone know for sure?

WhenIam64

The argument here is that it is not an increase in capital but a counterbalancing amount which will extinguish debts. From a capital point of view you are no different before or after.

From an income point of view, you are (should be) better off as you are paying less interest. (Personally not a great fan of consolidation loans as they can go wrong)

calcotti

WhenIam64 wrote: »

The argument here is that it is not an increase in capital but a counterbalancing amount which will extinguish debts. From a capital point of view you are no different before or after.

I don’t think this is correct.

If the money is in your account it is capital and will be taken into account as such. If it is more than £16,000 you are not entitled to UC.

Debts are not taken into account so you cannot offset the money in account against debts you owe.

You need to pay off the other loan ASAP. If the new money comes into your account and goes out again within the same assessment period you are fine. If the money is still in your account at the end of the assessment period there is no UC entitlement.

Deprivation of capital is not an issue. UC is clear that paying off debt is not deprivation of capital (unlike old benefits when it could be).

huckster

Agree with Calcotti.

The cash loan was taken out to pay debts and that is how it should be used.

If it stays in the Bank, it will have to be declared for benefit purposes.

WhenIam64

You need to pay off the other loan ASAP. If the new money comes into your account and goes out again within the same assessment period you are fine

I had put in a comment to clear the debts prior to the UC claim, but it is self-explanatory that the loan and the debts should be squared at the same time. But I removed it as an oversimplification.

For the sake of clarity I also agree with Calcotti as the timing is everything

Jadey89

Can anyone help me just made a joint claim for universal credit my partner works and takes home £1327 a month I have a 9 year old son and currently can't work due to ill health! I have just looked on my journal statement and it's saying payment this month is £0 surely this can't be right?

poppy12345

Jadey89 wrote: »

Can anyone help me just made a joint claim for universal credit my partner works and takes home £1327 a month I have a 9 year old son and currently can't work due to ill health! I have just looked on my journal statement and it's saying payment this month is £0 surely this can't be right?

You need to start a new thread of your own with your question. Asking questions on other peoples threads causes confusion because people read the first comment and reply to that.



Use this link to start a thread. https://forums.moneysavingexpert.com/newthread.php?do=newthread&f=139