Redundancy payment and universal credit

[Justrealised]

Hi, if my friend gets a lump sum as a redundancy payment can she use it to pay off debts so she doesn't owe on her credit card/ loan etc and continue to claim universal credit please? I was wondering if she would need to declare the lump sum then use that to live on and continue paying off small amounts as she does now?

The first option makes the most sense to me.

Redundancy pay ( if reported correctly by employer) is treated as capital rather than earnings. So if over 6k it will reduce her UC amount slightly. It should be ok to pay off debts as that would not be seen as deprivation of capital. If she does not have over 6k in her account then it won't be a problem. If over 6k she should report it to Uc until it drops below 6k again. If over 6k it will only reduce her monthly Uc by £4.35 for each £250 over the 6k.

@Babyroobs thank you very much. Do you by chance if she has an insurance that pays out so much per month if she's made redundant will this be treated as income? I would have thought it would? It isn't a straight mortgage payout, it's a set amount each month. Any help is much appreciated. Thank you