IVA DLA & UNIVERSAL CREDIT

mrsmedina

Hi All

I have just entered into an IVA through payplan. The original agreement took into account my son's DLA money and offset the whole amount to his care needs. 
 Since then I realised my son was also entitled to an additional elememt of Universal Credit. I informed payplan and they have increased my monthly payments instead of offsetting the extra money again.
Are they allowed to do this as obviously that money is meant for my son, not to pay off my debts. 
When I disputed this they asked for proof that the money is needed for his needs but honestly as I didn't even know he was entitled then I hadn't thought about how it would be spent yet. I'm looking at getting him some private therapy and tutoring buy nothing sorted yet. 
Can anyone advise please? 
Thank you 😊

fatbelly

I take it that your son is a child and therefore they were right not to take his DLA into account.

The extra element that you get in your UC I assume is the disabled child element. That is your income.

I'm surprised that you have enough surplus income to support an IVA when you are on Universal Credit. I would have thought one of the other forms of insolvency would have been more appropriate. Maybe you are a homeowner and have gone that route rather than a longer-term debt management plan.

Do those numbers still stack up now that you have extra income and DRO rules change next month?

mrsmedina

Yes my son is 11.
The only asset I have is a car that was gifted to me by my parents that I wanted to try and keep (valued at just over £5000, but bought from a family member for less by my parents) 
So the disability element of UC is classified as income? I thought it would be classed the same as his DLA 😒
I might have to reconsider my options and look at bankruptcy maybe. 
Do you know where I would stand with the car if I went the bankruptcy route? We can prove that it was purchased by my parents and not me, but it is registered in my name. They would be really upset if I had to sell it 😒
Thank you so much for your reply by the way 😊
Oh and I'll google the DRO changes as I was not aware of them. 

sourcrates

How much is your debt ?
That`s the important factor here.

You are only allowed a car to the value of £1000 in bankruptcy, so that would not be a good choice as things stand.

mrsmedina

My total debt is just under £15000

fatbelly

If you were trying to protect a £5000 car then I can see that would make Paylan think about an IVA - well that and the several thousand in fees that are built into the IVA.

If the car can be shown to be owned by your parents but you are just the registered keeper, then that would open up bankruptcy and DRO as cheaper options.

The new criteria for DROs are 

• the value of assets allowed to be owned by the debtor from £1,000 to £2,000 as proposed in the consultation;

 

• the value of a single motor vehicle that can be disregarded from the total value of assets from £1,000 to £2,000;

 

• the level of surplus income received by the debtor before payments should be made to creditors from £50 to £75 per month and

 

• the total debt allowable for a DRO from £20,000 to £30,000 as proposed in the consultation. 

 
These changes will come into force on 29 June, to coincide with the end of the first 60 day Breathing Space period.

mrsmedina

Could I be in trouble if I put the car back into my parents name now before entering into a DRO or bankruptcy and arranged for me to be a named driver on their insurance so I could still drive it? Would it be classed as fraudulent? 

Ivabr89

Hi hope I can help a little as this was my situation too ... I was in an iva (still am but waiting for it to fail) and applying for a DRO June... when I started getting dla .. they offset it for needs. But tax credits rose so I was also in a sticky situation... I then lost job die to covid last year.. then had a change to universal... so same as you.. they offset dla.. but I claimed carers through lock down (you may be eligible look into it) .. thing is carers is income .. but deductions are taken off universal so makes that lower too. Also things change a lot. I found that reviewing income expenditure I was spending more on food than the year before more on clothes I entered the iva being VERY harsh to myself. But realistically kids need things so up your spend and it will even out the extra disability element 

Ivabr89

Does anyone know if DRO take DLA as income? Or will it be offset like iva and bankruptcy? 

mrsmedina

I'm already claiming the carers element on UC and haven't bothered applying for it separately as like you say it just gets deducted from UC anyway. 
I get the single person element and child element, plus disability element and carers. Then DLA separately. This is my only income right now as I cannot work as my son cannot cope with school right now due to severe anxiety. 
I think I'm going to wait until the new DRO rules come into force then re-evaluate which route is best. I just need to figure out if I can put the car back into my parents name and if this will be classed as me being fraudulent. My parents bought the car as they were constantly having to bail me out on repairs to the old bangers I had previously, so was a long term investment in their eyes. 

fatbelly

In a DRO, we are advised to list the client's DLA as income and put the same amount down as expense on care/mobility needs.

Now, that car. I'm not sure what you mean about 'putting it back' as there is no register of owners. There is only 'registered keeper' on the V5 document and it clearly says on that document that it is not proof of ownership.

The proof of ownership is normally the receipt for the purchase - who was it sold to and who paid for that.
If you're saying that it was listed as yours in the IVA agreement then yes it is possible a creditor would flag that up as an issue to be looked at..