Benefits After House Sale

booboo85

Hi All,

Sorry if this is in the wrong catergory, so admins, please move it if needed

Just wondering if someone can offer some advice regarding my situation...

Current situation is that I live in my mortgaged property with my two children, after my partner left us. He currently doesnt live in the property, doesnt pay anything to me for the mortgage or bills and he has now suddenly decided to not pay any child maintanence.

He is now saying that he is struggling finanicially and may go bankrupt (not sure if its true), which i know may force a sale on the house.

So, lets say that happens....the house would be sold and the equity split, which would mean i would recieve approx £40k.

However, I only earn £14k a year (about £1,100 take home) and therefore I claim Universal Credit to basically make me survive!

If I recieve this £40k, I am unable to get a mortgage on another property, as effectively, due to my low wages, I would only get a mortgage of up to £40k, meaning I can buy a property for £80k (which is simply not possible to buy a house for that around where i live).... this leads me to thinking that I am going to have no option but to rent.

However, I assume the £40k in my bank will make me lose my universal credit, as reading up i believe you cannot have anymore than £6k in the bank? - This really is so unfair, as all the money I have paid to my mortgage will have to be spent on rent, yet my partner simply walks away with £40k in his backside pocket, after cheating, leaving and not paying a penny!! 

My question is, can I do anything to help me keep my universal credit?

- For example, can I spend the £45k to get it down to £6k, such as paying off debt (I have about £9k), buy a new car, go on holidays etc?

- Can I give simply give this money to a family member (who is struggling financially aswell) or put this in a trust or something for my children?

- Could I buy a caravan or lodge on a holiday park and live in there and then still claim Universal Credit?

- If i do have to use this money purely for rent and bills, once it is down to £6k, can I start to reclaim universal credit?

I appreciate any advice anyone can give me and if anyone has any questions or wants further info, let me know.

Thanks all in advance

elsien

Presumably your partner  would also have to use his 40 K for rent the same as you - it’s  no more unfair in that he also has to use his equity for day-to-day living.

You can pay off debt.  If you start spending it on cars and holidays just to claim UC there will be questions about deliberate reduction of capital and a UC claim could well be refused.
You can spend on reasonable expenses, but if you always have secondhand cars and suddenly buy a top of the range range new car, they will not accept that. 
You can’t give it away or put it in Trust for the children so that you can claim UC because again that is deprivation of capital. 

You can reclaim  in the future once your savings have got down to the correct amount

Be very careful about buying a caravan or holiday lodge. They are a Depreciating asset and after a certain amount of time the site owner can insist you replace it with a new one.  Which you probably couldn’t afford so your money would be gone,  Some site managing agents are a legal  nightmare. You have no control over your utility costs, Many of them you can only inhabit for eleven months a year, plus the difficulty of having children in such a confined space. 

For maintenance, go back to CMS. 

booboo85

elsien said:

Presumably your partner  would also have to use his 40 K for rent the same as you - it’s  no more unfair in that he also has to use his equity for day-to-day living.

You can pay off debt.  If you start spending it on cars and holidays just to claim UC there will be questions about deliberate reduction of capital and a UC claim could well be refused.
You can spend on reasonable expenses, but if you always have secondhand cars and suddenly buy a top of the range range new car, they will not accept that. 
You can’t give it away or put it in Trust for the children so that you can claim UC because again that is deprivation of capital. 

You can reclaim  in the future once your savings have got down to the correct amount

Be very careful about buying a caravan or holiday lodge. They are a Depreciating asset and after a certain amount of time the site owner can insist you replace it with a new one.  Which you probably couldn’t afford so your money would be gone,  Some site managing agents are a legal  nightmare. You have no control over your utility costs, Many of them you can only inhabit for eleven months a year, plus the difficulty of having children in such a confined space. 

For maintenance, go back to CMS. 

Thank you for your reply

My ex partner earns 45k a year, so he wont have a problem getting another mortgage, so he will not need to use his £40k share for rent payments.

Even if he has say £40k worth of debt (as he's "close to bankruptcy" so he says - which i dont believe), he will be able to wipe that out, make himself better off every month and get back onto the property ladder, were as I have no option but to rent...

I guess it is what it is, but just seems so unfair considering for the last 3 years hes not made any mortgage contribution and has been paying absolutley minimal child maintanence payments (some months nothing).

Spoonie_Turtle

Just so you know, the limit for savings on UC is £16,000 not £6,000.  For savings between those two thresholds there is a deduction of £4.35 for every £250 or part thereof over £6,000.

TELLIT01

You cannot give the money away.  That would be classed as Deprivation of Capital, and your benefit entitlement woud be reduced because of that action.  Not only would you no longer have the money, you would have reduced benefits too.  Definitely not a good idea.

elsien

booboo85 said:

elsien said:

Presumably your partner  would also have to use his 40 K for rent the same as you - it’s  no more unfair in that he also has to use his equity for day-to-day living.

You can pay off debt.  If you start spending it on cars and holidays just to claim UC there will be questions about deliberate reduction of capital and a UC claim could well be refused.
You can spend on reasonable expenses, but if you always have secondhand cars and suddenly buy a top of the range range new car, they will not accept that. 
You can’t give it away or put it in Trust for the children so that you can claim UC because again that is deprivation of capital. 

You can reclaim  in the future once your savings have got down to the correct amount

Be very careful about buying a caravan or holiday lodge. They are a Depreciating asset and after a certain amount of time the site owner can insist you replace it with a new one.  Which you probably couldn’t afford so your money would be gone,  Some site managing agents are a legal  nightmare. You have no control over your utility costs, Many of them you can only inhabit for eleven months a year, plus the difficulty of having children in such a confined space. 

For maintenance, go back to CMS. 

Thank you for your reply

My ex partner earns 45k a year, so he wont have a problem getting another mortgage, so he will not need to use his £40k share for rent payments.

Even if he has say £40k worth of debt (as he's "close to bankruptcy" so he says - which i dont believe), he will be able to wipe that out, make himself better off every month and get back onto the property ladder, were as I have no option but to rent...

I guess it is what it is, but just seems so unfair considering for the last 3 years hes not made any mortgage contribution and has been paying absolutley minimal child maintanence payments (some months nothing).

He would do if he went bankrupt, which scenario you suggested. It is also not unreasonable for him to want or need his equity from the house at some point, either way - presumably he’s having to pay for his own place, wherever he is? 

booboo85

elsien said:

booboo85 said:

elsien said:

Presumably your partner  would also have to use his 40 K for rent the same as you - it’s  no more unfair in that he also has to use his equity for day-to-day living.

You can pay off debt.  If you start spending it on cars and holidays just to claim UC there will be questions about deliberate reduction of capital and a UC claim could well be refused.
You can spend on reasonable expenses, but if you always have secondhand cars and suddenly buy a top of the range range new car, they will not accept that. 
You can’t give it away or put it in Trust for the children so that you can claim UC because again that is deprivation of capital. 

You can reclaim  in the future once your savings have got down to the correct amount

Be very careful about buying a caravan or holiday lodge. They are a Depreciating asset and after a certain amount of time the site owner can insist you replace it with a new one.  Which you probably couldn’t afford so your money would be gone,  Some site managing agents are a legal  nightmare. You have no control over your utility costs, Many of them you can only inhabit for eleven months a year, plus the difficulty of having children in such a confined space. 

For maintenance, go back to CMS. 

Thank you for your reply

My ex partner earns 45k a year, so he wont have a problem getting another mortgage, so he will not need to use his £40k share for rent payments.

Even if he has say £40k worth of debt (as he's "close to bankruptcy" so he says - which i dont believe), he will be able to wipe that out, make himself better off every month and get back onto the property ladder, were as I have no option but to rent...

I guess it is what it is, but just seems so unfair considering for the last 3 years hes not made any mortgage contribution and has been paying absolutley minimal child maintanence payments (some months nothing).

He would do if he went bankrupt, which scenario you suggested. It is also not unreasonable for him to want or need his equity from the house at some point, either way - presumably he’s having to pay for his own place, wherever he is? 

Hi,

Yes thats true, but i honestly believe he is saying he will go bankrupt to force my hand in selling the house.

Then I believe he will just pay any debt off and go on his merry way. Its all guess work, but i know him better than anyone!

It sounds as though my best option, if it happens, would be to rent and play it as follows, based on information people have given me:

• Recieve the money - Say £40k.
• Pay off my £9k debt - Leaving me with £31k.
• Use the house money to pay my new rent payment for approx 15 months - Leaving me £16k in the bank.
• Then when im down to £16k in the bank, reapply for Universal Credit, which will probably be reduced amount.

If anyone thinks theres a better way, please give me an example

Thank you to everyone for taking the time out to give me advice.

Hoenir

Have you applied for an attachment of earnings to ensure receipt of the Child Maintenance? 

booboo85

Hoenir said:

Have you applied for an attachment of earnings to ensure receipt of the Child Maintenance? 

Hi,

No i have not instructed CSA to take maintenance payments directly from his wages.

I was planning on doing that this week, until he told me that if i do that, he will probably go bankrupt!

That is what has made me come on here and discuss my situation.

Myci85

My sister was in a similar position and she bought a shared ownership property with the equity from the house sale. That meant she was still eligible for universal credit and help with paying the rent portion for the s/o property, without losing all the capital she had built up. Is this something you could look into?

There are pros and cons to s/o so do your own research, but I think this is one situation where the pros outweigh the cons, certainly for my sister it did. 

bazdvd

Paying rent in advance can be a valid expense and does not automatically trigger a deprivation of capital for Universal Credit or Housing Benefit purposes, as long as the payment is made to fulfill a genuine liability, like a tenancy agreement requirement. However, if the payment is made with the deliberate intention of reducing capital to qualify for or increase benefits, it could be considered deprivation of capital. 

If a tenant pays six months' rent upfront because their tenancy agreement requires it, that is not deprivation. However, if someone with significant savings decides to pay a year's rent upfront solely to lower their capital to qualify for benefits, that could be considered deprivation.