Disability Benefits and Debt Relief Management

tcellmutation

Hello,

Unfortunately I’m currently in a financial situation where things have gotten a little out of control. A DRO will wipe out up to £20K of debt.

I’ve weighed up all the options and the impact my option will have, so my question is...

Being on disability benefits only, no other money coming in at all, will this allow me to qualify for a DRO or will my disability benefits count as income therefore meaning I will have “income over £50 spare each month” which, from my understanding, disqualifies me from getting a DRO?

Thanks in advance!

poppy123456

HI,

PIP will be classed as income. You need to make sure you put down what you use the PIP for because it's to help with the extra cost of having a disability.

tcellmutation

poppy123456 said:

HI,

PIP will be classed as income. You need to make sure you put down what you use the PIP for because it's to help with the extra cost of having a disability.

Thanks Poppy,

I just found this

Benefits

Income includes money from UK state benefits (or their foreign equivalents) except income-based Jobseeker’s Allowance (JSA) or ‘tax-free’ benefits. Tax-free benefits include:

• Child Benefit
• Housing Benefit
• Attendance Allowance
• Disability Living Allowance
• Personal Independence Payment
• the foreign equivalents of UK tax-free benefits

https://www.gov.uk/claim-tax-credits/what-counts-as-income

I think this relates to tax credits so not sure if it’s the same?

poppy123456

That doesn't apply here.

tcellmutation

poppy123456 said:

That doesn't apply here.

Ok. I’ll contact Citizens Advice on Monday

tcellmutation

Also found this...

The £50 “spare income” test

You may be unsure about the £50 “spare income” level.  The level of spare income will be assessed by the debt advisor that sets up your DRO (see below).

The expenses allowed are not the same as those usually used in an IVA or a DMP!

I have come across people who have had an IVA payment of over £100 proposed who have been “under £50” on the DRO criteria. If all your income comes from benefits or state pension then you will pass this test, so you don’t need to worry that disability benefits such as DLA or PIP will mean that you have too large an income.

Some people who have been struggling with debt repayments find the expenditure allowances surprisingly generous – this may be the first time for many years that you have any money to spend on clothes!

tcellmutation

tcellmutation said:

Also found this...

The £50 “spare income” test

You may be unsure about the £50 “spare income” level.  The level of spare income will be assessed by the debt advisor that sets up your DRO (see below).

The expenses allowed are not the same as those usually used in an IVA or a DMP!

I have come across people who have had an IVA payment of over £100 proposed who have been “under £50” on the DRO criteria. If all your income comes from benefits or state pension then you will pass this test, so you don’t need to worry that disability benefits such as DLA or PIP will mean that you have too large an income.

Some people who have been struggling with debt repayments find the expenditure allowances surprisingly generous – this may be the first time for many years that you have any money to spend on clothes!

You are right but it seems I’ll be okay