Self management/ stepchange

ll1979

Hi all,

I'm just looking for a bit of advice. I was recently made redundant from my workplace and have been given 11k payout. I have £15k of debt and I'm hoping to make partial payments to each of my 5 creditors.  I've asked stepchange for all my info that they hold on me and my debts. All debts are credit cards or loans so no urgent debts. 

Any tips for self management?

I am a carer so I plan to claim UC carers and do some self employment up to the threshold permitted. I'm worried that UC will not view paying these debts as essential. I only plan to offer 50%/£6k for these debts as I need some financial security now that I wont be working in a traditional sense.

Has anyone experienced something similar? I'm actually scared to spend any of the redundancy money in case UC penalise me and Ive never claimed a benefit before. 

Thank you for reading ❤️

fatbelly

11k of capital won't stop a UC claim as you can have up to 16k. However, anything over 6k will have 'tariff income' applied

https://www.gov.uk/universal-credit/how-to-claim

If you have over £6,000 in money, savings and investments, your payment will be reduced by £4.35 for every £250 you have between £6,000 and £16,000. Another £4.35 is taken off for any remaining amount that is not a complete £250

You will need to look at the rules around self employment as this may make s/e non-viable after 12 months

You will have to show that you needed to use your lump sum or it will be treated as deprivation of capital.

I assume you want to settle 15k of debt by full & final settlement. That shouldn't take 11k. To start with, send all consumer credit debts a s77-9 cca request

ll1979

Thanks very much for your reply. As I'm a carer I wont have the minimum income floor. Is that what you mean about the self employment being non-viable? 

I'm okay with the tariff income but I'm a bit worried about spending the money and how long they will consider the savings after some of it has been spent. 

Thank you I will send my creditors the cca request.  That's really helpful.  

elsien

I thought that paying off Credit carddebt is okay with the universal credit and didn’t count as deprivation of capital? 

ll1979

elsien said:

I thought that paying off Credit carddebt is okay with the universal credit and didn’t count as deprivation of capital? 

Its confusing. I have been told both it will and it wont. Either way I hope to settle. X

JibberdyDacodo

The regulations seem to be quite clear on this

WelshPaul said:

I have been doing some research…

https://www.legislation.gov.uk/uksi/2013/376/regulation/50

Notional capital
50.—(1) A person is to be treated as possessing capital of which the person has deprived themselves for the purpose of securing entitlement to universal credit or to an increased amount of universal credit.
(2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a)reducing or paying a debt owed by the person; or
(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.
(3) Where a person is treated as possessing capital in accordance with this regulation, then for each subsequent assessment period (or, in a case where the award has terminated, each subsequent month) the amount of capital the person is treated as possessing (“the notional capital”) reduces—
(a)in a case where the notional capital exceeds £16,000, by the amount which the Secretary of State considers would be the amount of an award of universal credit that would be made to the person (assuming they met the conditions in section 4 and 5 of the Act) if it were not for the notional capital; or
(b)in a case where the notional capital exceeds £6,000 but not £16,000 (including where the notional capital has reduced to an amount equal to or less than £16,000 in accordance with sub-paragraph (a)) by the amount of unearned income that the notional capital is treated as yielding under regulation 72.

50.(2) clearly states:

A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a)reducing or paying a debt owed by the person; or
(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.

So I shouldn’t be penalised for my actions as they were lawful and within the rules of UC.