Universal Credit and House sale

[SquirrelySponges]

Hello,
I am in the process of selling my house after leaving an abusive relationship (house all in my name and all bills covered by me etc.). I am on a low income and now a single Mum so I do receive some UC to top up my wages and help me with bills and childcare. I have equity in my house and will receive approx £32,000. However I am in debt and owe Stepchange approx £22,000 (It was more but I've been paying it down for a few years). I also owe my Dad money leant to me for things regarding sorting the house out and the sale and owe him approx £5,000.

Therefore when all is paid off I will only have approx £5,000 in savings so eventually won't affect my UC. And I will be upfront and honest when I dp receieve the money and can obviously provide bank statements etc to UC. My question is has anyone ever had a similar situation and has it been smooth sailing or is my UC likely to stop for a few months and be a pain to kick-start again.

Please be gentle. The house sale is due to the debt and it's now too expensive to live in on my own. Debt was a combination of silly spending in my youth and most recently having to pay for my partner, all bills and food and baby stuff for our child as they lied to me about money, but that's a whole other story! I just need to get this house sale done so I can move on with my life, clear the debt and start again.

Thank you

It shouldn’t affect your entitlement.

Are you buying another home? Please keep records of the necessary spending as if you are not using the equity towards another home then it is possible that a decision maker may need to check where the money has gone. You will need to declare the money if it is in your account and your claim could close if over 16 thousand pounds but you reclaim once it is under this figure.

If you use capital to pay or reduce debt you will not be seen as having deprived yourself. The UC regulations are specific on this.

Can you ask your conveyancer to make the payments directly to your creditors and then just give you the balance?

No, I'm moving in with family and then will be renting for a while whilst trying to save for a deposit I'd possible. I will keep all records though. Thank you for your advice :)

Thank you, that is what I was hoping :)

Stupidly I hadn't thought of this but yes that would be a great idea. Thank you :)

Was about to make same suggestion as @OldTinHat.

And put a message on your Journal to say what's been done and why.

My friends lawyer dealing with the house sale kept the money and divvied it out I think so it didn't appear in her bank statements but I'm not sure how that works tbh. Seems like a plan if it can be done.

Not sure how the £5k will work though. That could look like you are hiding money by giving it to your dad. I don't know if it's possible to get a signed statement or something from him/you if your lawyer needs to evidence that the money was never yours it's a loan that you repaid.

I think as longa as you have proof that you owe your dad money then it will be ok. Otherwise obviously anyone could say that they owed people money in order to hide money with relatives. you need to keep records/ receipts of where the house sale money has gone.

Thanks everyone you've all been great help.

My Dad is very financially savvy and has kept records of all money he has leant me and dates and invoices, receipts etc so it can all be proved. So hopefully it will be ok. If not and UC want to count it it takes me to 10k savings so I will still be entitled to some UC even if they reduce the amount a bit. I'm more worried about them not covering my childcare costs anymore as that would leave me penniless.

I've been a fool in the past but I've definitely learnt many lessons and I have had years of scrimping and saving to sort things out. I can't wait to have it all sorted and to gave a fresh start for me and my baby.

Thanks again for all your advice and putting my mind at rest!

If you are moving in with family won't their income be taken into account too?

No. Op is a separate financial unit to her family.

I don't think so no. You tell them you are living with family but they don't take into account their earnings. I will pay towards bills and things but my family don't have enough money to keep me or anything so it shouldn't affect anything. But I'll be honest about everything to UC just in case. It's a temporary measure until we find somewhere for ourselves x

They are not allowed to do this anymore unless connected to the transaction eg. estate agents.

Your family's income has nothing to do with you for UC purposes but if they are on benefit and claiming housing costs, there will a deduction made for you living there. It's only about 90 quid a month though and presumably you would make this up to them anyway if living there.

It shouldn't affect your entitlement.
When you agree the completion date, try to time it so that you receive the money and then pay it off your debts all within on assessment period. You will probably also need some type of letter from your dad confirming that you owe him money and have now repaid it.

Not saying you're wrong but do you have a source for that.

Seems a bit odd that you cannot tell your lawyer where to send money but. OTOH, the paranoia about money laundering is such that nothing would surprise me.

Does the fact it's being paid to the OP's account with Step Change who are presumably managing some formal arrangement for debt for her make any difference?

SRA Rules state that a solicitors client account cannot be "used" as a bank account and make third party payments. They can only make payments directly connected to the transaction eg. disbursements and estate agent fees (and some won't even do that for fear of breaching the SRA accounts rules).

https://www.sra.org.uk/solicitors/guidance/improper-client-account-banking-facility/

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Been through something similar OP and UC were very reasonable. Yes, you have to prove any outgoings are genuine.
Just one thing, do you have to pay Step Change? Can't you put the money instead into housing/deposit?

@Spirallingdownwards A solicitor, holding the proceeds of sale of a client's home, accepts her clear instruction to pay money directly to the OP's Debt Management PLan. It's a one off and not part of a series of transactions.

Are we really living in a world in which the SRA would consider that to be providing a banking service?

You have misunderstood. Any payment the solicitor makes needs to be part of the transaction/series of transactions that the solicitor has been acting for that client. So if a company sale anything to do with that, if a house sale to do with that, if probate or personal injury to do with that.

Asking them to make a payment to a third party from any monies they receive in connection with the case they are working on even the debt management plan would be seen as a banking transaction. They pay the money to the OP and she pays it to the debt plan from her own bank account.

Yes we are living in a world where solicitors can be struck off for making payments that are not in accordance with the SRA accounts rules.

If you're not allowed to have the conveyancer/lawyer pay off the creditors I'd just make sure everything was done in the same week so if the money hits your account and then gets distributed you will only be over the threshold for a week so perhaps the worst that could happen is that you lose means tested benefits for a week?

Maybe best to talk to them and explain things.