Clearing most of my credit cards debt avoiding to lose my benefits. — Scope | Disability forum
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Clearing most of my credit cards debt avoiding to lose my benefits.

Hello,

I am claiming PIP and ESA IR and I am planning to sell my home in order to buy a smaller place and also to clear most of my credit cards debt (£28000 overall). I expect to have £22000/£25000 sitting in my bank account at the end of the conveyancing, which exceeds the minimum threshold of £16000. I am going to clear most of my debt with those funds the same day I receive them. What complications might arise with the DWP and what documentations they will need to see? My benefit will be stopped?

Thanks in advance
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Comments

  • poppy123456
    poppy123456 Member Posts: 28,573 Disability Gamechanger
    Hi,

    Once you receive the money in your bank you will need to report it to DWP. As you will be exceeding the amount you're entitled to themn your ESA will stop (if it's all Income Related ESA) if part of it is Contributions based then this part will continue.

    Paying of debt is unfortunately, classed as deprivation of capital unless you're receiving letters demanding payment. Deprivation of capital means you'll still be classed as having the money. Hope this helps.
  • theitalianalien
    theitalianalien Member Posts: 44 Connected
    Hi Poppy, 
    thanks for your help......well I guess it's better to buy a more expensive flat then and have just under £6000 profit circulating in my bank account.

    Thanks
  • poppy123456
    poppy123456 Member Posts: 28,573 Disability Gamechanger
    Are you 100% sure that all your ESA is Income Related? or is part of it Contributions based? if you're not sure then you can ring DWP to ask.
  • theitalianalien
    theitalianalien Member Posts: 44 Connected
    Yes it is, before claiming I worked for nearly 14 years. I guess they won't stop my PIP, in case I exceed the £16000 threshold
  • theitalianalien
    theitalianalien Member Posts: 44 Connected
    My Esa is all Income related.
  • poppy123456
    poppy123456 Member Posts: 28,573 Disability Gamechanger
    If you worked for 14 years before claiming ESA then part of it could be Contributions based. Were you previously claiming Incapacity benefit before ESA?

    PIP won't be affect because it's not means tested. If you're claiming council tax reduction this will also be affected if you have £16,000 and over.
  • theitalianalien
    theitalianalien Member Posts: 44 Connected
    I'll check the paperwork then. No I wasn't claiming incapacity benefit.

    Yes sure I will have to pay the full council tax.
  • poppy123456
    poppy123456 Member Posts: 28,573 Disability Gamechanger
    It's not always easy to understand the paper work from DWP especially with ESA. Possibly one of the most confusing letters i've ever seen. Best thing to do if you don't understand it is to ring them and ask.
  • theitalianalien
    theitalianalien Member Posts: 44 Connected
  • janer1967
    janer1967 Member Posts: 15,260 Disability Gamechanger
    Hi and welcome to the community, nice to have you on board here, I see your query has been answered anything els we can help you with just ask
  • Oxonlady
    Oxonlady Member Posts: 459 Pioneering
    theitalianalien and poppy123456, sorry to intrude in your conversation but please could explain to me what the £16,000 threshold is? I always thought that if you have more than £6000 in your bank account, then you'd lose your ESA and consequently Housing benefit and Council Tax relief? I realise that DLA and PIP are not means tested. 
  • poppy123456
    poppy123456 Member Posts: 28,573 Disability Gamechanger
    Oxonlady said:
    theitalianalien and poppy123456, sorry to intrude in your conversation but please could explain to me what the £16,000 threshold is? I always thought that if you have more than £6000 in your bank account, then you'd lose your ESA and consequently Housing benefit and Council Tax relief? I realise that DLA and PIP are not means tested. 

    Savings of £16,000 and over and yes you will not be entitled to any means tested benefits. Less than this but more than £6,000 and your benefits will be reduced by £1 per week for every £250 over that amount. If claiming UC there's a £4.35 per month deduction for every £250 over that amount.
  • theitalianalien
    theitalianalien Member Posts: 44 Connected
    As far as I am aware you can have less than £6000 and this amount will be ignored by the DWP, if you have more than £6000 up to a maximum of £16000 your benefit will be reduced and there is a calculation to be made. Over £16000 ESA will be stopped. Yes council tax relief will be lost if you have more than £6000, I dont know about housing benefit, cos I never claimed it.
  • woodbine
    woodbine Community Co-Production Group Posts: 7,207 Disability Gamechanger
    As above if part of your ESA is Cont. based that would continue and you would only lose the IR part (i've recently gone through this myself.)
    Be extra nice to new members.
  • theitalianalien
    theitalianalien Member Posts: 44 Connected
    Thanks for the input woodbine
  • leeCal
    leeCal Member Posts: 5,263 Disability Gamechanger
    edited July 2020
    Hi @theitalianalien, I may be naive but why not ask the dwp? Pose it as a possible outcome when you sell your property, ie “what if I have more than 16000 would it be okay to pay off my credit card debts or would that be classed as wrong?” Or similar. 
    in the same situation I once asked them if I could buy double glazing and they told me home improvements were fine, ie new kitchen, double glazing etc. 
    Just a thought.

    “If you think you are too small to make a difference, try sleeping with a mosquito.”


    ― Dalai Lama XIV
  • theitalianalien
    theitalianalien Member Posts: 44 Connected
    Yes I am going to ask them too. It's just my daily thought for something that didnt materialise. Well home improvements are not in my case, I am trying to clear debts using my own funds, but it will be classed as deprivation of capital, but again I will give them a call on Monday.
  • poppy123456
    poppy123456 Member Posts: 28,573 Disability Gamechanger
    edited July 2020
    Under the old legacy benefits such as Income Related ESA/JSA and income support, paying off debt with a large lump sum is classed as deprivation of capital in order to claim a means tested benefit. If you're paying off debt weekly with your own money, of course it's not deprivation of capital.

    However, under Universal Credit, paying off debt is not classed as deprivation of capital.

    Do also be aware that asking DWP this sort of advice, you may not be given the correct advice, as it has been known for them to give bad advice. Yes, ask them whether your ESA is income related or Contributions based or part both because they will look at your claim and tell you.
  • theitalianalien
    theitalianalien Member Posts: 44 Connected
    Thanks for your input and to be so bright to understand my position...I had many advises, which were not accurate
  • poppy123456
    poppy123456 Member Posts: 28,573 Disability Gamechanger
    You're very welcome. I'm glad i could help :)

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