Being given a lump sum and don’t know what to do

beth1611

I’m very fortunate that my parents are gifting me £30,000 but I don’t know what to do with it.

I’m currently in an IVA with 16 months to go, private rent, work part time and have 2 children aged 11 and 5.
I can’t work full time as childcare costs eat up any extra income I could earn- no family live nearby to help with kids and I’ve been going through the family courts for 2 years with exh who wants contact but there are concerns re the safety of the children when with him.

I get tax credits and housing benefit so I’m aware I can’t actually bank the money without becoming illegible for those benefits.
I’ve looked at shared ownership but there are none in my area and because of exh and my son starting secondary school I can’t move away.
So what do I do? I’ve never had any money other than debt

tacpot12

If your parents give you this money, you will have to tell your Insolvency Practitioner that is running your IVA about it, and you may have to use it to pay off your debts AND the fees of the Insolvency Practitioner. If what is left is more than £6,000 it will start to reduce your benefits. The reduction can be quite significantly because the DWP assume you are getting more interest from the money than you can actually earn from any currently available savings account.

Your parents could keep the money, invest it in an ISA and pay you some money on a monthly basis. If they wait 16 months before they start paying you any money then you will not have to declare this extra income to the Insolvency Practitioner. It will also not count against your benefits because it is a gift.

overlander

Get them to pay you in cash and keep it until you are out of the IVA. Use it only when needed and keep as much as possible. When you are out of your IVA whatever you have left can go on a house deposit or whatever. Why the hell would you accept a gift from your parents and hand it over to an IVA. I would even ask them to hold onto it until the IVA is done.

Sea_Shell

In the short term, could it work if one of them opened an account with a debit card, in their own name and deposited this money...and then gave you the card and pin, which you could use for everyday spends until you're out of your IVA??

Yes it would technically be in breach of the t&c's, but less risky than you actually accepting the money in full now.

What are their reasons for the gift...is it their own estate planning that's prompted it, i.e. they NEED to give it away now!!?

On second thoughts, they could open a credit card account and have you as a second card holder (if you're allowed) to the same effect...without breaking any T&C's . They then pay the bill each month... simples.

Unicorn_cottage

Hi there

Just a few questions to help with the picture. Do your parents know about your situation? Why are they giving you the money?

beth1611

No they don’t know about my Iva- they’re giving me the money because my Nan passed away and my mum inherited some and she wants me and my siblings to benefit from it now rather than in the future.

WhenIam64

Get them to pay you in cash and keep it until you are out of the IVA.

Is this actually help? There is a fine dividing line between logic (not paying anything until after the IVA) and hiding money from an IP - and your creditors.

You mention being on benefits too. Hiding money from DWP or your LA not a good idea as they have access to information that others do not.

Sea_Shell

Oh, awkward!!

It might be best to confess to your Mum about your situation, so she understands that a lump sum now is not the best idea.

Is she really 'old school' about debt though and are you worried she'll judge you harshly...and worse case change her mind about the gift completely!!

Only you know your Mum.

enthusiasticsaver

As you say you have two issues. The benefits will be affected if you have more than £6k in savings and render you ineligible for them. If you come into any sort of windfall then you should let the IVA provider know and it will be divided amongst the creditors. Obviously after the 16 months is up that is no longer the case so as others have said it is best for your mum not to hand it over unless you are happy for it to be used to clear the debt within the IVA. How much is left?

You may need to come clean to your mum to either explain why you don't want it yet and ask her to bank it for you in her name until you are ready to decide what to do. You could say it will affect your benefits which may or may not be better than admitting you are in an IVA. Ultimately though if you want to buy a property you will need to get a full time job unless property is very cheap in your area. You are unlikely to get a big enough mortgage on a part time wage even with the £30k deposit.

beth1611

I’m not sure how much is left on the Iva- how would I find out for certain?
If it’s a case of multiplying the number of months left on the Iva by the amount I pay each month then it’s just over £3000 if it’s my actual debt amount then I believe it’s around £27k now- Thanks ex husband!

I was thinking more along the lines of shared ownership when I was considering buying a house but obviously that’s tricky with my credit anyway.

Telling my parents about the debt is not an option

enthusiasticsaver

beth1611 wrote: »

I’m not sure how much is left on the Iva- how would I find out for certain?
If it’s a case of multiplying the number of months left on the Iva by the amount I pay each month then it’s just over £3000 if it’s my actual debt amount then I believe it’s around £27k now- Thanks ex husband!

I was thinking more along the lines of shared ownership when I was considering buying a house but obviously that’s tricky with my credit anyway.

Telling my parents about the debt is not an option

Hmm I think it would be the £27k if you declared the £30k to the IVA provider as that is the actual debt amount. That would practically wipe out the windfall. Can you ask them to keep it for a year or so to avoid your benefits being affected? Can they just save it in their name? Realistically you wont get a mortgage for some time because of the IVA and presumably numerous defaults. Either you use the £30k to wipe out the debts and start again or you concentrate on saving as much as possible over the next few years until your credit record is reasonable enough to get a mortgage. There are brokers who deal with people with bad credit history but you cannot do anything for 16 months anyway.