Is paying off a credit card 'Intentional Deprivation of Capital'? — Scope | Disability forum
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Is paying off a credit card 'Intentional Deprivation of Capital'?

RSISolutions
RSISolutions Community member Posts: 128 Courageous
Is paying off a credit card 'Intentional Deprivation of Capital'?
I am talking about someone who has money in the bank account and is claiming ESA income related. 

Comments

  • Blue Frog
    Blue Frog Community member Posts: 358 Pioneering
    edited November 2017
    I'm not sure, hopefully one of the benefits advisors will be along on Monday.

    I sold my car and used the cash to make an overpayment on my mortgage - while on Income Support.  I made a declaration and they were absolutely fine about it. 

  • Geoark
    Geoark Community member Posts: 1,463 Disability Gamechanger
    @RSISolutions unless the claimant can show the credit company was demanding full payment then yes, as there would have been no need to pay the full amount and would be seen as trying to maximise the amount of benefit received.

    What I am not sure is if there are possible mitigating circumstances which could be taken into account. For example buying a large value essential item using your credit card gives extra protection if something goes wrong as the credit company is jointly liable, rather than paying by cash or debit card. 

    While the best advice is to pay off credit cards as soon as possible if you are on one of the main benefits (ESA and JSA for example) and have savings over £6,000 this can cause problems.

    Hopefully one of the benefit advisors will be able to clarify things for you on Monday.

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  • BenefitsTrainingCo
    BenefitsTrainingCo Community member Posts: 2,621 Pioneering

    Hello RSISolutions

    The capital rules for income related ESA are that savings of above £6,000 reduce benefit entitlement by £1 for every (or part) £250 above £6,000.  If savings are above £16,000, then a person is not entitled to income reacted ESA.

    If savings are below £6,000 then entitlement will not be effected and so the issue of deprivation is not relevant.  However, if savings are reduced now to avoid going over capital limits in the future, the DWP may consider this past expenditure as relevant to the question of the amount of capital and the issue of deprivation.

    Deprivation is case dependent.  That is, it will be relevant to ask or consider in each case, for example:

    - why the debt had to be paid off in one lump sum, if it had to be paid off in one lump sum,

    - the purposes which led the claimant to act as they did,

    - the claimants knowledge of benefit rules,

    -the claimants character or health

    It is also correct that the DWP must find that a person knew of the capital limits. The DWP may point to leaflets issued to the claimant, if a tariff income is already being applied, length of time on benefits as inference of knowledge to capital rules.

    As such, there is no right or wrong answer to your question.  Ultimately it will be up to a tribunal to decide if the claimant acted as they did to ensure they received or retained benefit. 

    Maria Solomon

    The Benefits Training Co:

  • Brokenman
    Brokenman Community member Posts: 7 Connected
    The person would not be gaining anything financially or materially within their own households financial situation by paying off a debt. The D.W.P could argue you got rid of money when you didn't need to except they would then become hypocrites for this following reason. The DWP lend people money therefore that becomes a debt of yours. The DWP expect their money back as do the credit company. EXACTLY THE SAME. Now that is a loan which is exactly the same as a credit card bill is A LOAN. So it appears to me that the DWP has set the PRECEDENT here and that there is nothing they can say then surely? 
    This is something that could set a precedent for any bills possibly, if they decide to say this that or the other bill needn't of been paid whenever.

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