Universal Credit - more than £6000 in savings but also in debt?

Solid_Bruce

Everywhere says having more than £6000 affects Universal Credit but does this take into account debt?

For example -

I have 2 credit cards owing £8000 but interest free and not due until 2022

I have a bounce back loan from the government of £10,000

So I owe £18,000

I have £13,000 in my current account.

So I am actually in debt but have £13k in my bank.  How does this affect UC?

Spoonie_Turtle

UC takes into account your savings. If you want to reduce them, you can pay off some debts.

I'm not sure whether the Bounce Back loan is counted or not though.

Petriix

You may be able to disregard capital if it is earmarked for a payment. It may be down to the discretion of whoever is working your case and the rules are quite complicated so you may be better off just paying the credit cards off.

Some more information is shown on https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/capital-rules/

Not all capital is taken into account, some may be disregarded and sometimes claimants may be treated as having capital even if they do not physically have it (notional capital). Advisers can find the detailed rules about capital in the DWP ADM Chapters H1 (Capital) and H2 (Capital disregards).

calcotti

The bounce back loan is a business asset and should be ignored as personal capital.

For UC purposes you cannot offset debt against capital so if you have £13,000 in an account and £8,000 of debt you are treated as having £13,000 of capital. You are allowed to pay down debt without it being treated as deprivation of capital.

Solid_Bruce

calcotti said:

The bounce back loan is a business asset and should be ignored as personal capital.

For UC purposes you cannot offset debt against capital so if you have £13,000 in an account and £8,000 of debt you are treated as having £13,000 of capital. You are allowed to pay down debt without it being treated as deprivation of capital.

Thanks.  So for arguements sake, if I have £13,000 and lend my friend £10,000 I only have £3,000 in capital/savings and this would be okay?

tomtom256

Solid_Bruce said:

Thanks.  So for arguements sake, if I have £13,000 and lend my friend £10,000 I only have £3,000 in capital/savings and this would be okay?

No, not if you where claming benefits or did it to maximise your entitlement.

calcotti

Solid_Bruce said:

calcotti said:

The bounce back loan is a business asset and should be ignored as personal capital.

For UC purposes you cannot offset debt against capital so if you have £13,000 in an account and £8,000 of debt you are treated as having £13,000 of capital. You are allowed to pay down debt without it being treated as deprivation of capital.

Thanks.  So for arguements sake, if I have £13,000 and lend my friend £10,000 I only have £3,000 in capital/savings and this would be okay?

That is likely to be treated as deprivation of capital in which case you are treated as if you still have the money you have got rid of.

Spoonie_Turtle

Is the £13000 *including* the Bounce Back loan?

NedS

If you have a bounceback loan, you are presumably self employed / own a business.

Please can you clearly differentiate for us your assets and debts. We need to know what assets and debts your business has, and what assets and debts you personally have. You need to be very clear.

The £10k bounceback loan is presumably a business asset, taken out in the name of your business.

What is the credit card debt? Are these personal credit cards or are they business credit cards?

What is the £13k in your bank account? Is this personal savings or is it business capital? Is it a personal bank account or a business bank account?

Without clear answers to the above it's impossible to offer you any meaningful advise.

Spoonie_Turtle

^ Some banks allow the loans to be taken out in personal accounts, I don't know if that complicates things or if it can still be clearly shown that it is in the name of the business. Would help if the OP answered the questions, of course.

Solid_Bruce

NedS said:

If you have a bounceback loan, you are presumably self employed / own a business.

Please can you clearly differentiate for us your assets and debts. We need to know what assets and debts your business has, and what assets and debts you personally have. You need to be very clear.

The £10k bounceback loan is presumably a business asset, taken out in the name of your business.

What is the credit card debt? Are these personal credit cards or are they business credit cards?

What is the £13k in your bank account? Is this personal savings or is it business capital? Is it a personal bank account or a business bank account?

Without clear answers to the above it's impossible to offer you any meaningful advise.

I am a self employed writer, have been out of work since March and then got on UC in April.

Bounce back loan taken through business account and was eligible because was making money last year.

Business is just me, not assets.

Credit card is personal debt taken out for stoozing.. to take advantage of interest free period to put money into savings account. 

The 13k is made from the 10k loan and personal money

Hope this is more clear