Help with sale of house funds

shellbell0501

Hi everyone,
I'm looking for a wee bit help please. My mum recently had to sell her house due to her finances and she is now in a emergency accommodation.She has a little money left from sale of house and wants to clear her debt with it. Council tax and energy are completely up to date but she has a large amount with wescott. Should I pay this debt in full for her or set up a payment plan. I'm just not sure what to do? Thank you 

RAS

Is your mum in receipt of any means-tested benefits, or likely to be in the near future (eg housing costs) ?  If so, anything over £6k will have to be taken into account and using that for anything other than reasonable living costs could be deprivation of assets.

This money may also be vital to help get her into rented accommodation?

Paying her monthly installments would be OK, but paying off debts has been considered deprivation of assets. Which means the DWP and Council assess her needs as if she still has the money and causes a lot of grief.

In the circumstances, I think your mum might be better advised to stop paying and in a few months ask for a commercial decision to write off the debts. Obviously, that's not likely to be accepted if she's sitting on £xxK  but might be acceptable if her net receipts were very low.

shellbell0501

That is really helpful. Thank you so much. I will pass this on to her and we can have a discussion. I appreciate your time and advice 😊

Brie

Has she talked to one of the debt advice agencies?  NationalDebtline, Stepchange, Community Money Advice (CMA), possibly Citizen's Advice.

They would be able to advise her on situation and what might be a good way to handle the debt she has left.  Be wary of IVAs or DMPs, it's possible a Debt Relief Order might be the solution but until someone has looked at the whole situation it's hard to know.  

Has she talked to Shelter about getting into some place permanent to live?

elsien

I’m not sure that paying debts is off is considered deprivation of capital for benefits purposes? @sourcrates? 

Although it may not be the best use of any limited savings that she has, in the circumstances.
What does she have left from the sale of the house and how much is the debt to WestCott?

enthusiasticsaver

I think she should sort out her housing situation before using what little capital she has to repay debts. How much does she have left?  As others have said sitting on a pile of cash may affect her entitlement to benefits.