Can you off-set bank and credit card debt with 'savings'

bearofverylittlebrain

I have recently been made redundant after 10 years earning a reasonable salary. I have receive PILON (10 weeks) and my redundancy lump sum (15 weeks due to my age), added to acrrued holiday pay and almost a full month's salary.
It seems to me that everything in any account you own is deemed 'savings' even though the official line is money due from earnings does not count (so my PILON, accrued holiday and March wage are technically exempt) - but they just look at the figure in the accounts. I also have an ISA which is not very big and am paying interest only on my mortgage (the plan was to sell the house when I didn't need to house 4 children, but 2 still bounce back regularly and 2 still live here full time, I have 16 years left on the mortgage, so time is still on my side!)
My situation is complicated by the fact that I was quite happily servicing a loan for university fees for my daughter who couldn't get SFE tuition fee funding for medicine as a 2nd 'first degree' (~£10k left over 31mths) and I have about £8k which I have been bouncing around on 0% c/c transfers, paying minimum amount by DD and topping up as I could when I had spare. This is a hangover from a messy divorce and a truculent child maintenance payer. My youngest is now 19 so I no longer get that or any WTC or CTC. 
I hope to get back into work reasonable quickly - I have started the process of training to be a driving instructor whilst applying for jobs in case I don't qualify. I have only been officially redundant for a week so far. All of this has been manageable and I don't consider myself out of my depth so long as I can earn similar again. I was working part time so going full time at a lower hourly rate even would bring home at least the same money.
When I registered for benefits - was advised to do it asap - I explained about the loans and credit cards and the money about to come in. I was told that they cannot offset the loans/credit card bills with my 'savings' but I could pay off the loans and therefore not have savings. Currently my total 'savings' would exceed the £16k UC cap, but my outstandings would clear that out completely. If I qualify for UC I would also get help with Council Tax etc. I will get the income based JSA (or whatever it's called) anyway but that doesn't give any other help.
My problems here are:
The tuition fee loan is as at 3.9% - a rate I would be unlikely to get again if I went back to the bank and asked for a loan to buy a car to start as a driving instructor as they would deem it a start up business loan - and of course I am currently unemployed anyway! There are loans available from UC to start up, but at 6% interest from what I can see. It makes no sense to pay off a cheap loan to borrow at a higher rate. I could clear the credit card and buy a car using that and then try getting another 0% transfer, but there is an admin fee each time you bounce the money. This 0% runs until Sept 22!!
My mortgage interest is nearly 4% lower than the rate they charge on the interest payment loan which I can't get until 9 months have passed anyway - so I would sooner keep some cash in hand to cover my standard payment than add their interest charge to the debt for when I sell the house.
I could buy a car now for the potential driving career (my current vehicle is a 13 year old 2.0 VW Touran - not an ideal learner car!) and therefore not have so much savings but I would prefer to qualify first as there is nothing wrong with my current car if I don't succeed in passing the ADI tests. 
Does anyone have any experience of this type of situation???  I don't like the idea of draining my cash reserves if I can service the debts whilst I get straight again.
Sorry for such a long first post but any advice would be gratefully received - I don't understand why they can't off-set debt with cash in accounts??

calcotti

I haven’t read the whole post but will respond to the question in the title.
Your capital is the total of what you have. They cannot he offset by debts and liabilities. You can however pay off debts, if they are in your name, without this being no considered deprivation of capital.

They cannot offset because there is no provision in law to do so.

New style JSA is not means tested and will pay for 26 weeks.

Alice_Holt

"I was told that they cannot offset the loans/credit card bills with my 'savings' but I could pay off the loans and therefore not have savings. Currently my total 'savings' would exceed the £16k UC cap..."
  You were advised correctly. This is the legislative position.

Paying down your credit card bills would surely be an option for you?  Would this reduce your savings to below £16k, and enable you to claim UC in addition to JSA?

I would suggest you check outcomes on a benefit calculator:
https://www.gov.uk/benefits-calculators
From the information in your post I would expect any UC entitlement to be roughly £320 before deduction of any tariff income from savings between £6k and £16K.

CTr is separate to UC and is run by your LA.  Each LA has its own scheme, and you may find it has a £6k savings limit.

calcotti

Alice_Holt said: From the information in your post I would expect any UC entitlement to be roughly £320 before deduction of any tariff income from savings between £6k and £16K.

Alice, could you expand on how you arrived at that figure?

TELLIT01

calcotti said:

Alice_Holt said: From the information in your post I would expect any UC entitlement to be roughly £320 before deduction of any tariff income from savings between £6k and £16K.

Alice, could you expand on how you arrived at that figure?

I was wondering that too as the OP says " Currently my total 'savings' would exceed the £16k UC cap, "

calcotti

TELLIT01 said:

calcotti said:

Alice_Holt said: From the information in your post I would expect any UC entitlement to be roughly £320 before deduction of any tariff income from savings between £6k and £16K.

Alice, could you expand on how you arrived at that figure?

I was wondering that too as the OP says " Currently my total 'savings' would exceed the £16k UC cap, "

Alice was suggesting what the UC would be if OP reduces savings below £16,000 - I just couldn't see how she arrived at £320

pmlindyloo

Quote from OP.

Currently my total 'savings' would exceed the £16k UC cap, but my outstandings would clear that out completely. If I qualify for UC I would also get help with Council Tax etc. I will get the income based JSA (or whatever it's called) anyway but that doesn't give any other help.

See bolded part.

OP, did you mean New Style JSA which pays £74.35 per week?
New Style JSA (based on your NI contributions) isn't means tested so your savings would not stop you from getting this.

However, if you wish to keep your savings then this would be all you would be entitled to.

I am concerned that you say New Style JSA doesn't give any other help.

If you only had savings of under £6000 then you would be eligible for Universal Credit.

Based on the information you have given you have no dependents and no housing costs so the amount of UC you would get would be about £20 a week more than New Style JSA.

You do not say whether your other daughter/son living at home works or not (I am presuming the student lives at home). This may affect any council tax reduction you would be awarded if you cleared some debt and became eligible for UC.

Also we do not know the actual debt amounts you have.  You may wish to clear one debt (?) to take you under the £16K savings threshold for Universal Credit.

Perhaps you could provide a little more information?

In the end you will have to make some decisions yourself.  We might be able to suggest options if you could tell us the family situation and the amounts of your debt.

One final thing, is it the council tax reduction (if you were on UC) that you would 'like' or something else?

calcotti

pmlindyloo said: If you only had savings of under £6000 then you would be eligible for Universal Credit.

Should say £16,000. UC payable reduced by anything over £6,000.

However I agree with your analysis, as a single claimant the maximum UC appears to only be £20/week more than the new style JSA so that really shouldn't be a motivating factor in deciding what to do with the capital. If after six months situation hasn't changed and new style JSA runs out that will be different. (It's why I couldn't see how Alice arrived at £320.)

Alice_Holt

calcotti said:

Alice_Holt said: From the information in your post I would expect any UC entitlement to be roughly £320 before deduction of any tariff income from savings between £6k and £16K.

Alice, could you expand on how you arrived at that figure?

   My (incorrect) assumptions were:
   Basic UC for I adult    £409
   Child element (1)       £235   (I assumed the lower rate) 
   No housing or other elements.

   Total UC eligibility £644  less 4.3 weeks of JSA @ £75   leaving c. £320 pm.
 Assumed paying off the Credit Card debt brings savings between £6-16k.

"4 children, but 2 still bounce back regularly and 2 still live here full time,"I excluded the 19 yr old, but missed her comment that is was the youngest who was 19, and incorrectly included one child element in the calculation.  

  Taking this out brings was to pmlindyloo,s £20 pw - subject to a reduction for tariff income for savings between £6-16k

calcotti

I don't think there is a child involved - OP says youngest is 19 and they no longer CTC. Without child we are on basic allowance of £409 only which is £86.67/month more than the JSA will pay (even if there is no savings deduction).

bearofverylittlebrain

Hi all. To Clarify - 
Loan for eldest (27) - living away from home at med school.
2nd (25) is also living away from home and has complex needs and spent approx 9 mths last year in hospital - staying with me at the moment but graduated with aggregate marks last year from Leeds and is still registered in Leeds for healthcare and other support. She still lives in a house share there.
3rd (23) living at home, more health issues, in receipt of PIP
4th (19) living at home and working
Total debt £10k bank loan and £8k c/c aside from day to day running costs which are settled every month. 
I have a mortgage to pay but know I will get no support with that and am only paying the interest element to make my income stretch further. There is enough equity to buy an adequate place for myself when I don't need to house 4 extras.

I am entitled to the income based job seekers allowance which is not means tested. I believe this gets deducted from any UC I might get. I would be entitled to a carer's allowance for No 3 if I was in receipt of UC, I don't know if that would be added to the other allowance or if it is just a UC add on. My Council Tax would be reduced by almost 50% if I could get UC (I lose some of the total reduction due to the JSA income I think ... I have some ball park numbers from the 'entitled to' site)

I am just getting very confused by the whole thing to be honest. Obviously the further I can stretch my funds to cover my overheads the better. I would hope to be working again within the 6 mths for all the reasons I have outlined initially but there are no guarantees in life! I thought I would be in that last job until I retired!