Redundancy, UC and loan repayment

13lauren

Hi all,

My partner may be being made redundant in May with a pay out of £13k. We are in receipt of UC as join claimants with two dependents. We are both employed me full time and him part time.

My question is would we be allowed to pay off our debt before we submit our savings?

We had a meeting with the job centre today for some advice and left with more questions than answers. They said the redundancy payout would be considered as income not capital -however a quick google search says otherwise. They also said we should not pay all our debt off as we would need the money to live on as it is likely they would close our UC claim because we would receive a lump sum and they would expect us to live off that. Yes we could live off that but for only a few months as we could potentially have no second income (until a new job is found) or UC.

We owe £4000 in credit card/store credit and we also received a £5700 loan from my partner’s parents to buy a car last year. I have read that giving the money to family would class as a ‘deprivation of capital’ however they bought the car for us with the intention of us repaying them back.

Unfortunately the car also needs repairing and we have been quoted £2000 for- which we have been putting off as we have not had the funds.

Would we be able to make all the repayments and fix the car before submitting our savings?

Any advice is much appreciated.

peteuk

Paying off debts is not seen as DoC, so your credit card is ok.
The loan from his parents, is there anything to say its a loan and it need to be paid back, if there is then great.
The car repair I would get two more quotes just to prove it needs £2k of repairs.

You only need to declare your capital at the end of the AP, however just incase you get pulled for review it might. Be worth noting it on your journal, that way it’s evidence of yes whe had it and now we don’t because of x,y,z.

Brie

Can't really answer the questions about UC but I would guess they mean that the month the redundancy is received it is income. The next month it's savings.

But about the debts - yes you'd need to have something in writing about the loan from family - otherwise it looks like your giving them a great big cash present. And by in writing that could be emails, texts, message whatever - something that gives the details, the date and says you'll be paying it back.

And about the cards/loans….anything defaulted? If so you could ask them for a full and final settlement amount and maybe not pay so much out. Worth a try.

NedS

Any redundancy payment should not be treated as income on UC, so is capital from the moment you receive it. Any Pay in lieu of notice (PILON) or owed holiday pay will be treated as income and will reduce any entitlement to UC in the month in which it is received.

As above, you can pay off any legitimate debts without that being considered DoC, so you should certainly pay off your credit card debt the moment the redundancy payment is received.

Do you have any legally enforceable agreement for the loan with parent's-in-law? If not, this could be seen as deprivation of capital were you to pay it back immediately.

HillStreetBlues

Have you any capital (savings) atm? if not you might not have to worry about parents repayment if you get car fixed and pay off debt.