Can you offset debt against savings on UC?

funnymonkey

Good morning.
I am being moved from Tax credit soon to UC and was wondering if my personal debt of 5k (credit cards) can be offset against savings of roughly 5k which I wish to keep as savings for emergency money if needed.
So thereby giving a balance of roughly £0
Thank you

marcia_

funnymonkey said:

Good morning.
I am being moved from Tax credit soon to UC and was wondering if my personal debt of 5k (credit cards) can be offset against savings of roughly 5k which I wish to keep as savings for emergency money if needed.
So thereby giving a balance of roughly £0
Thank you

 Nope you can't. 

fatbelly

Capital under 6k is disregarded.

Your strategy only makes sense if you can keep the cards permanently at 0%. Otherwise you will be paying more interest on the cards than you are gaining on the savings.

Pay the cards off with the savings and if you have an unexpected expense, you still have the cards

Spoonie_Turtle

The only way to 'offset' savings and debt is to use savings to pay the debt.

But as already stated, savings under £6,000 are ignored anyway.

Muttleythefrog

funnymonkey said:

Good morning.
I am being moved from Tax credit soon to UC and was wondering if my personal debt of 5k (credit cards) can be offset against savings of roughly 5k which I wish to keep as savings for emergency money if needed.
So thereby giving a balance of roughly £0
Thank you

No, but you can pay off the debt. Savings under £6k are irrelevant anyway.

Check that this arrangement you have makes financial sense re: interest rates.

TELLIT01

Being able to pay off any debts is one of the big changes with UC compared to the old legacy benefits (ESA, JSA, IS) where there were very tight constraints on the debts you could pay without risking accusations of 'Deprivation of Capital'.

Helen1471

I have a similar situation. I have credit card debt of around £4.000 which is currently on 0%. Instead of paying off this debt I put the money into a 12 month fixed bond with the intention of paying  the debt when the 0% deal ends. I also have savings of £2,500. Doing this makes practical sense to me, but does universal credit take this into account when working out savings. So on paper I have a total of £6,500 however £4,000 of this is not mine and belongs to my credit card. This money was proceeds from the sale of my house. Will the debt off set my savings? I also read somewhere that proceeds from a house sale is disregarded for the first 6 months. I wondered if this was true. 
Thanks 

HillStreetBlues

Helen1471 said:

I have a similar situation. I have credit card debt of around £4.000 which is currently on 0%. Instead of paying off this debt I put the money into a 12 month fixed bond with the intention of paying  the debt when the 0% deal ends. I also have savings of £2,500. Doing this makes practical sense to me, but does universal credit take this into account when working out savings. So on paper I have a total of £6,500 however £4,000 of this is not mine and belongs to my credit card. This money was proceeds from the sale of my house. Will the debt off set my savings? I also read somewhere that proceeds from a house sale is disregarded for the first 6 months. I wondered if this was true. 
Thanks 

Two issues here
1) the debt is ignored, it doesn't counterbalance your monies would be £6,500
2) The proceeds from a home sale is only disregarded if it's intended to be used to buy another home.

Muttleythefrog

Helen1471 said:

I have a similar situation. I have credit card debt of around £4.000 which is currently on 0%. Instead of paying off this debt I put the money into a 12 month fixed bond with the intention of paying  the debt when the 0% deal ends. I also have savings of £2,500. Doing this makes practical sense to me, but does universal credit take this into account when working out savings. So on paper I have a total of £6,500 however £4,000 of this is not mine and belongs to my credit card. This money was proceeds from the sale of my house. Will the debt off set my savings? I also read somewhere that proceeds from a house sale is disregarded for the first 6 months. I wondered if this was true. 
Thanks 

As above... you have £6500 in savings as far as means testing goes for benefits like UC. You can legitimately reduce those savings for UC by paying some or all of credit card debt. "£4,000 of this is not mine and belongs to my credit card" - if you've got £4000 from a credit card company it is your money...you control it. Similarly if you buy a home with a mortgage... the lender owns none of it which is why they as standard insist on transacting with written legal powers to recoup their money if you can't pay them back.

If you sell your home you can ask them to disregard the proceeds if you intend to use such to buy another home to live in. The 6 month disregard can be extended in some situations such as if a purchase is waiting to complete or a seller pulls out of a transaction. 

Newcad

Use £1,000 of the savings to pay off £1,000 of the card debt.

You will then have £1,500 in savings and £4,000 in the bond = £5,500 total which will not affect UC payments.

Or stay as you are and have a deduction from UC payments of £8.70 a month. (£13.05 if your total savings go a penny over £6,500).