Personal loan, debts and housing benefit

[patchouli]

Not sure if this is the correct section but my friends sister is in a pickle and I promised my friend I would see if you lot know the solution.

ok so.

She owes various companies £18k... she is challenging the companies with CCA etc.
She is claiming housing benefit and council tax benefit.
Her Father recently lost his partner who left some money for him, he said he would loan her £20k from the estate to put into a dormant bank account she has for if/when she needs to pay a full and final. he's determined to do this and plans to some time next week.

Now she says no one knows about her 'secret' account (she originally opened it about 9 years ago for saving up for a holiday but hasn't used it really since much) but she is scared that somehow housing benefit would find out and that she would be in serious trouble. Apparently she has to disclose any savings of (and I forget how much now) £3k+ I think?
The money would only be for the various debts IF needed and for other people she owes money to that she has borrowed from over the years.

Is she breaking any laws by having this stash aside for her debts?

I have no idea about this.. I said that I assumed if anyone from housing did find out then she could prove she owed the monies and prove she was disputing the debts and that any money left if the debts are written off would go back to the Father. (although I suspect he will let her keep it)

Is that correct or will housing benefit simply see more than £3k and say "Well you don't need housing benefit do you!"

[Pixie]

Re: Personal loan, debts and housing benefit

It is my understanding that she would be breaking the law.

Why doesn't her father put it in a separate account in HIS name and, should the need arise for a F&F settlement make the payment on her behalf. I'm sure I've read that F&Fs are better done through a third party anyway.

He certainly won't be doing her any favours by putting the money in an account in her name. What does he intend to happen to the money if it isn't needed for F&Fs? And why so much (more than the actual debts)?

[ATW]

Re: Personal loan, debts and housing benefit

It is my understanding that she would be breaking the law.

Why doesn't her father put it in a separate account in HIS name and, should the need arise for a F&F settlement make the payment on her behalf. I'm sure I've read that F&Fs are better done through a third party anyway.

He certainly won't be doing her any favours by putting the money in an account in her name. What does he intend to happen to the money if it isn't needed for F&Fs? And why so much (more than the actual debts)?

That seems to be the best approach. If the debts are then found to be unenforceable the money doesnt need to change hands so it shouldnt affect benefits.

[patchouli]

Re: Personal loan, debts and housing benefit

I made a mistake sorry it is £18.

She was right then... ok I will advise her not to accept the money into her account.

[PlanB]

Re: Personal loan, debts and housing benefit

She is claiming housing benefit and council tax benefit.

Her Father. . . . said he would loan her £20k from the estate to put into a dormant bank account she has . . . he's determined to do this and plans to some time next week.

Now she says no one knows about her 'secret' account . . . . but she is scared that somehow housing benefit would find out and that she would be in serious trouble.

She must stop her father from paying that money into her account next week. Even if she returns it after he pays it in the money may still be treated as "notional capital" because it does exist even if he is keeping it for her in a tin under his bed. At this point in time she hasn't accepted his gift. Keep it that way. Giving it back may be tantamount to "deprivation of capital". There are strict rules on this issue and the Benefits Team will interpret them in their favour.

I'm also concerned that she has this "secret account" however little money is in it. When you apply for benefits you have to declare all bank accounts including the sort code and account number. If she didn't do that then she is definitely at risk of being accused of cheating. From time to time her HB and CT benefit application will be refreshed and she has to re-declare her situation or confirm her circumstances haven't changed. Every time she doesn't declare that bank account she is digging herself a deeper hole in terms of a potential fraud claim. As far as the Benefits Team are concerned it's not about the amount of money it's about lying. Full stop.

If she's still unconvinced about the seriousness of her 'oversight' tell her to read this thread by a member of ours who got a criminal conviction for being less than transparent about her financial situation with a HB claim. Once your friend reads the thread I guarantee she won't want to try to circumnavigate the benefits' system ever again.

http://forums.all-about-debt.co.uk/s...l=1#post135955

My advice is for her to close that account PDQ.

[patchouli]

Re: Personal loan, debts and housing benefit

yuck, scary.. will send the link!

What happens then when people win a cash amount? Just occured to me that I know a family who need HB help but last year won a few grand (not sure exact amount) on the Lotto. They spent it on holidays and a new car, paying off credit cards etc and I'm pretty sure they didn't declare it.

[PlanB]

Re: Personal loan, debts and housing benefit

As far as I'm aware Lottery wins have to be declared otherwise the claimant can be sent to prison for benefit fraud. This bloke was told by the judge "the world doesn't owe you a living" as he handed down a sentence for a guy who continued to claim benefits after a win.

http://www.telegraph.co.uk/news/ukne...-benefits.html

I think money received from compensation claims such as personal injury (from accidents at work etc) or employment tribunals are exempt from some (but not all) benefits.

[patchouli]

Re: Personal loan, debts and housing benefit

Blimey.. scary world isn't it lol

Ahhh if only someone would give me enough money to pay off my debts... bliss.

[ATW]

Re: Personal loan, debts and housing benefit

As far as I'm aware Lottery wins have to be declared otherwise the claimant can be sent to prison for benefit fraud. This bloke was told by the judge "the world doesn't owe you a living" as he handed down a sentence for a guy who continued to claim benefits after a win.

http://www.telegraph.co.uk/news/ukne...-benefits.html

I think money received from compensation claims such as personal injury (from accidents at work etc) or employment tribunals are exempt from some (but not all) benefits.

Its a bit of a minefield Plan B. Compensation can cover a lot of things such as the injury loss of earnings medical expenses etc etc. It may need to be split up into its constituent parts to assess its effect. I think damages for loss of earning would probably be caught. Im not sure about damages for the pain (pain suffering and loss of amenity is the phrase used) of the injury and it may matter whether it compensates for the same thing that is causing the benefits claim. Its something that needs to be checked carefully before settling a claim if you are on benefits especially if its a substantial claim that may have unintented consequences. The rules are constantly being fiddled with as benefits get redifined.

[oscar]

Re: Personal loan, debts and housing benefit

Doesnt it depend on the amount? You are allowed a certain amount in savings, and if they cleared debt, its not is if they had a life of luxury. (suppose depends on the amount won and the cost of a holiday)

[PlanB]

Re: Personal loan, debts and housing benefit

The DWP have a Compensation Recovery Unit to claw back the money awarded in some cases. The compensator has a duty to inform the CRU of the amount paid and why. It's all explained in this Government Guidance updated only yesterday for some reason:


https://www.gov.uk/government/public...e-html-version

[patchouli]

Re: Personal loan, debts and housing benefit

Doesnt it depend on the amount? You are allowed a certain amount in savings, and if they cleared debt, its not is if they had a life of luxury. (suppose depends on the amount won and the cost of a holiday)

hmm.. yes so what if when she got the money she immediately paid off her debts (not sure who she owes to as I dont personally know her).... So she gets £18k.. pays it out over the next few days to her debts and ends up with £0.. would she still be penalised? Surely the government would rather you spend benefits on essential living and not debts?