Can my bank keep my tax credits if I owe them money?

Holly_Jones4

Hi everyone
I have been saving up for my BR fee and I'm finally almost there....  I've had some great advice on here from my previous posts and have spent the last month preparing for going BR.  I have opened up a basic account with Barclays and have transferred over all my direct debits and standing orders. My salary, child benefit and housing benefit are already going into this new account but I've only just, today, informed HMRC who pay my work/child tax credits weekly on a Friday. They have updated by bank account details but they weren't able to tell me how quickly this change will happen.  My question is this... if I go BR this week and my credit continues to go into my old bank account will they keep it? I have a £3500 overdraft on my old account with Lloyds which is part of my BR application.  I guess they would be entitled to keep this benefit but I am so reliant on having it every week, I'd be stuck without it. 

Any advice would be greatly appreciated!

Thank you
Holly

mwarby

I believe there are special rules for benefit payments, but in general a bank can cancel the overdraft at any time, this would leave you in an unauthorised overdraft which you wouldn’t be able to draw from. Once your actually bankrupt the banks are not allowed to take money from your payments only from OR, the accounts are normally frozen

The safe thing to do would be to await the payment and if it goes to new account your good, old try and transfer it. The change should take less than a week (the slowest transfer is BACS which is 3 days, if one was in a batch already they may not want to recall it)

before you go bankrupt try and have a weeks worth of cash on hand, in case your account is temporarily frozen 

db2016

just a thought, but you dont need to pay for BR in one go, as in "save" for it. i was able to do £20/50 etc at a time over a month or 2 to do mine.

thevdm

The or can't take any benefits for an IPA (max is the money you earn through employment/pension etc...), the bank on the other hand can freeze the account and recover what's in there if you owe them money. Assuming the TC payment goes in and the account is still in the overdraft then they'd just call it a slightly smaller debt.

From my experience in transfering tax credits to a different account, it took about 3 to 4 weeks to complete.