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Property equity release
Hi, any advice greatly appreciated.
Client has equity in his property and has released an amount in excess of £6k 4 times to pay debts (mainly legal costs). He hasn’t informed the DWP as the money was used to pay debts. My feeling is that this will affect his benefits. Will it be treated as income in the month he received it, or capital which could then potentially be deemed deprivation?
It’s capital, and wouldn’t be deprivation if used to pay off debts.
It’s capital, and wouldn’t be deprivation if used to pay off debts.
True for UC, but not necessarily true for other benefits as the rules are different - a person who uses capital to repay a debt that they are legally required to repay and is immediately repayable will probably (but not certainly) be OK. Weighing off the outstanding amount on your credit card when you were in any event able to meet the monthly repayments and repayment of the full amount was not being requested is likely to be more problematic. But in all cases, the answer to the question of deliberate deprivation will be fact specific.
Correct, but we are in the UC forum…
It’s capital, and wouldn’t be deprivation if used to pay off debts.
Thanks Charles. I’m struggling to find the legislation/guidance. Can you provide the details please?
reg. 50 (2) UC Regulations 2013 is what you need.
@ Charles - true enough, though I’d not be confident that all readers of the forums would be live to that distinction (it’s viewable by anyone).
@ Charles - true enough, though I’d not be confident that all readers of the forums would be live to that distinction (it’s viewable by anyone).
Yep, true.
On a related point:
What would you say about someone who buys something which would not be considered reasonable expenditure in their circumstances on a credit card, and then pays off the credit card using their capital?
@ Charles - true enough, though I’d not be confident that all readers of the forums would be live to that distinction (it’s viewable by anyone).
Yep, true.
On a related point:
What would you say about someone who buys something which would not be considered reasonable expenditure in their circumstances on a credit card, and then pays off the credit card using their capital?
That is deprivation in the first instance so the second part i.e. paying the subsequent debt, doesn’t affect the first action.
Hmm, can incurring a liability be deprivation? The claimant could potentially not even have had any assets at the point they purchased the item!
Hmm, can incurring a liability be deprivation? The claimant could potentially not even have had any assets at the point they purchased the item!
If you had capital and used credit to buy something and then used the capital to pay off the debt, I’d say that would be deprivation.
If in the unlikely event you didn’t have assets and used a credit card to buy something and then came into a lot of money and repaid the debt subsequently, that would probably be fine.
I’m sure there’s case law on the former situation but can’t lay my hands on it. Think it was a house purchase?
Hmm, can incurring a liability be deprivation? The claimant could potentially not even have had any assets at the point they purchased the item!
True. And I’m with Paul on this one - it would probably/almost certainly be fine.
But assume I take out a HP agreement to buy an expensive new car which I don’t actually ‘need’ - and I do it on the strength of the fact that whilst her estate has yet to be settled, I’m certain to come into the £60k my maiden aunt has left me in around 6 months time. And once I do get the money I use it to weigh off the HP. And I do this because I know taking these steps will mean using the capital to pay off the HP will mean my UC is unaffected. Deprivation - at least in the ‘moral’ sense. And I’d say a DM with anything about them and who knew the full facts, would be pushing for an interpretation of reg. 50 that meant it was deprivation in the legal sense too.