Universal Credit & Deprivation of Capital (Mortgage)

Whiterose23

I just want to find out if anyone has experiences of using redundancy money to pay off all or part of a mortgage and whether that is allowed, and then still being able to claim benefits?

Everywhere I read online the answer appears to be that this is not considered a deprivation of capital, but at my first UC meeting yesterday, the advisor told
me that you can only use redundancy money or savings for this purpose if you are in mortgage arrears. Otherwise it’s considered deprivation of capital and UC will not be paid.

He said the same for any debt, that unless it’s in arrears, you cannot pay it off, otherwise UC would not be paid.

So basically I have to get myself blacklisted with lenders before I can use my redundancy to lessen the burden and claim benefits after working for 40 years?

Can anyone clear this up?

HillStreetBlues

Whiterose23 said:

I just want to find out if anyone has experiences of using redundancy money to pay off all or part of a mortgage and whether that is allowed, and then still being able to claim benefits?

Everywhere I read online the answer appears to be that this is not considered a deprivation of capital, but at my first UC meeting yesterday, the advisor told
me that you can only use redundancy money or savings for this purpose if you are in mortgage arrears. Otherwise it’s considered deprivation of capital and UC will not be paid.

He said the same for any debt, that unless it’s in arrears, you cannot pay it off, otherwise UC would not be paid.

So basically I have to get myself blacklisted with lenders before I can use my redundancy to lessen the burden and claim benefits after working for 40 years?

Can anyone clear this up?

Total an utter BS.
Repayment of a debt is never DoC is certainly doesn't have to be in arrears!  A mortgage is a debt and can be paid off at any point in time.

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

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.

Whiterose23

HillStreetBlues said:

Whiterose23 said:

I just want to find out if anyone has experiences of using redundancy money to pay off all or part of a mortgage and whether that is allowed, and then still being able to claim benefits?

Everywhere I read online the answer appears to be that this is not considered a deprivation of capital, but at my first UC meeting yesterday, the advisor told
me that you can only use redundancy money or savings for this purpose if you are in mortgage arrears. Otherwise it’s considered deprivation of capital and UC will not be paid.

He said the same for any debt, that unless it’s in arrears, you cannot pay it off, otherwise UC would not be paid.

So basically I have to get myself blacklisted with lenders before I can use my redundancy to lessen the burden and claim benefits after working for 40 years?

Can anyone clear this up?

Total an utter BS.
Repayment of a debt is never DoC is certainly doesn't have to be in arrears!  A mortgage is a debt and can be paid off at any point in time.

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

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.

This is what I thought and I asked him to clarify. He said I would not be entitled to Universal Credit if I used money to pay off all or part of my mortgage and to pay off any debt that would then place me in a position to claim, ie having less than £16,000, which is the cut off for allowed capital.

So basically I can only pay anything in arrears otherwise. I don’t understand why he would say that, unless there has been a change to the rules?

I said ‘but isn’t my mortgage a debt?’ His response was, ‘In this scenario, no because nobody is demanding a payment from you. You must be in arrears to justify using capital.’

peteuk

Whiterose23 said:

HillStreetBlues said:

Whiterose23 said:

I just want to find out if anyone has experiences of using redundancy money to pay off all or part of a mortgage and whether that is allowed, and then still being able to claim benefits?

Everywhere I read online the answer appears to be that this is not considered a deprivation of capital, but at my first UC meeting yesterday, the advisor told
me that you can only use redundancy money or savings for this purpose if you are in mortgage arrears. Otherwise it’s considered deprivation of capital and UC will not be paid.

He said the same for any debt, that unless it’s in arrears, you cannot pay it off, otherwise UC would not be paid.

So basically I have to get myself blacklisted with lenders before I can use my redundancy to lessen the burden and claim benefits after working for 40 years?

Can anyone clear this up?

Total an utter BS.
Repayment of a debt is never DoC is certainly doesn't have to be in arrears!  A mortgage is a debt and can be paid off at any point in time.

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

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.

This is what I thought and I asked him to clarify. He said I would not be entitled to Universal Credit if I used money to pay off all or part of my mortgage and to pay off any debt that would then place me in a position to claim, ie having less than £16,000, which is the cut off for allowed capital.

So basically I can only pay anything in arrears otherwise. I don’t understand why he would say that, unless there has been a change to the rules?

I said ‘but isn’t my mortgage a debt?’ His response was, ‘In this scenario, no because nobody is demanding a payment from you. You must be in arrears to justify using capital.’

A credit card with constant minimum payments is not in arrears but acceptable to clear it without incurring DoC.  Mortgage no different..

HillStreetBlues

Whiterose23 said:

HillStreetBlues said:

Whiterose23 said:

I just want to find out if anyone has experiences of using redundancy money to pay off all or part of a mortgage and whether that is allowed, and then still being able to claim benefits?

Everywhere I read online the answer appears to be that this is not considered a deprivation of capital, but at my first UC meeting yesterday, the advisor told
me that you can only use redundancy money or savings for this purpose if you are in mortgage arrears. Otherwise it’s considered deprivation of capital and UC will not be paid.

He said the same for any debt, that unless it’s in arrears, you cannot pay it off, otherwise UC would not be paid.

So basically I have to get myself blacklisted with lenders before I can use my redundancy to lessen the burden and claim benefits after working for 40 years?

Can anyone clear this up?

Total an utter BS.
Repayment of a debt is never DoC is certainly doesn't have to be in arrears!  A mortgage is a debt and can be paid off at any point in time.

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

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.

This is what I thought and I asked him to clarify. He said I would not be entitled to Universal Credit if I used money to pay off all or part of my mortgage and to pay off any debt that would then place me in a position to claim, ie having less than £16,000, which is the cut off for allowed capital.

So basically I can only pay anything in arrears otherwise. I don’t understand why he would say that, unless there has been a change to the rules?

I said ‘but isn’t my mortgage a debt?’ His response was, ‘In this scenario, no because nobody is demanding a payment from you. You must be in arrears to justify using capital.’

Many DWP staff haven't a clue and just make stuff up. We see it a lot on here, even if they stated snow was cold, I would need to check.

Jackie1813

I have to admit I was surprised reading this as I thought you could only pay debts that were due and payable not like a mortgage that is for agreed at twenty years or whatever. 

HillStreetBlues

Jackie1813 said:

I have to admit I was surprised reading this as I thought you could only pay debts that were due and payable not like a mortgage that is for agreed at twenty years or whatever. 

It was under old legacy benefits as it was "when due" but that changed over 10 years ago with UC. As it's been so long there is no excuse for DWP giving wrong info about this (can totally understand that claimants might not know).

Whiterose23

Jackie1813 said:

I have to admit I was surprised reading this as I thought you could only pay debts that were due and payable not like a mortgage that is for agreed at twenty years or whatever. 

This is basically what he advised me. 

Altior

Yes I read that in a court case from decades ago. 

Of course, the above principle only applies where the relevant debt is immediately payable. If the obligation to repay does not mature for several years, or, as in the case of the usual mortgage of house property, there is no need to repay the sum borrowed, provided the agreed interest and capital repayments are kept up, then any premature repayment of indebtedness will be a voluntary act constituting a deliberate choice. And if there is a choice then the question will arise as to whether a significant operative purpose albeit not necessarily the predominant purpose, was to secure supplementary benefit or any increase thereof (R(SB) 38/85; R(SB) 40/85).

UC legislation seems to have changed it all. 

rosewalk

There are different rules for Universal Credit and legacy benefits and it sounds as if the adviser you spoke to is confused. You can use your redundancy to pay off mortgage and other debt. Any talk of arrears is a red herring.

Altior

It's in the basic training for UC and capital that I have read, so as has been said, no excuse for getting it wrong. Or quite possibly they have a moral objection. But it has no standing legally, one of the few things in the benefits ecosystem that is unambiguous, reducing or settling debt is not DoC.