Compensation and Housing Benefit

[Kutter]

Hello everyone, I hope you can help me.

 

I have just finished with a 5 year case of clinical negligence, that I won. I am being paid compensation for injurys (which are pretty severe) to me thanks to this negligence.

 

I claim Housing Benefit as the condition precludes me from work, I claim no other benefits - my wife works and she is lucky enough to run her own business. She does however claim some Tax credits as a lower income worker.

 

We get by, just.

 

This compensation will be great for us, but I have a real problem with actually telling the housing benefit about this.

 

I'm not trying to be selfish here, or circumvent the system but this compensation is to help me with not being able to work. While I appreciate the help I'm getting from the DWP, the money we are getting will cover our debts, buy some things around the house for me, and ya know what to hell with it, we are going to spend some!!

 

I just want to know where I stand with this. It's not a fortune, it wont last longer than 6 months (although my injuries are for life - gotta love this countries red tape) and I really feel that I should say nothing.

 

I need some advice, I really dont know what to do.

 

Thank you for your help, it is appreciated.

 

Kutter

[honeybee13]

Hello and welcome to CAG.

 

The forum guys should be along later, please bear with us until they're able to get here.

 

My best, HB

[Conniff]

It looks like you are asking for others to back your 'sod em' indecision. While most will probably agree mentally, I can't see them saying so openly.

 

 

You say it will cover your debts, will you then be able to do without housing benefit? if so, couldn't you voluntarily end that and then do as you want.

[Kutter]

I can't disagree with you, Conniff. If the truth be told I want someone to say it will be ok, and everything will work out.

 

The truth of the matter is, my wife and I have debts which cover over half ov the money I am getting. That will leave us with about 30k sat in a bank account. Like I said this is 'not' a fortune, and as a couple who have been without for so long, we feel the right is ours to 'have a good Christmas', buy all those things that are essential to my well being and actually have some fun; something that I have been denied thanks to incompetence.

 

Do I want people to back my 'sod em' decision.. No, I dont. I would not ask for that from anyone. I guess what I want to know is if I do decide to be selfish, who's ever going to know?

 

I DO NOT feel that for an amount of 30k that I am being particularly 'dishonest'. I realize the overall impact sure, the complexities of the situation. I realise that 'strictly' it IS wrong and theres a chance the windfall will be discovered and the Housing Benefit paid to me will be asked for back. I can live with that if it happens. For now, I guess I just want to know how likely it is they will know.

 

Thanks for your help, I realise you cant answer certain questions, I realise that what I'm asking is not strictly 'right' but thats why I'm here; I really dont know whether to bother.

[essexmat]

I guess the question that you need to ask yourself, and only you can make the actual decision is do I want to do the legal and moral thing or do you say "this is nothing to to with benefits I receive and is for negligence as a lump payment" Some people will be more honest than others, depends how your mind works. What would I do? It is a hard one, you could live from this money and as soon as it has gone reclaim HB or you could simply 'get rid' of the money when paid or ask for it to be paid in to another account, that of a son or daughter or sibling? I had a similar case when in an IVA - I owed £38,000 and paid off £17,000 over 4 years but still owed around £9,000 on actual payments before my debt was wiped. I was made redundant and as it was classed as a windfall I had to pay this off legally. I could have said no and just gone bankrupt and kept the cash but morally I knew I owed the money and far less than what I actually owed so paid up - saying that I was still left with a fair bit BUT NOT over the amount I could claim JSA/HB for.

 

At the end of the day it is YOUR chouce and YOUR choice alone.

[Kutter]

Yeah, you see you make me think of something else too... I was always quick to jump on folks who claimed benefits 'illegally'. It used to wind me up people getting money under false pretenses.. Is this any different?

 

I'm a decent person 'morally' but I strongly believe that this money is not ANYONE's business. It has been paid to me for life changing issues that will not go away.

 

This is a hard one indeed.

[essexmat]

Oh I agree, I would also be in a situation where I would have to think hard about what to do. Of course morally claiming when over the threshold of savings is wrong but are these savings or is there a legal act that says payment for negligence etc does not affect benefit payments. This IS NOT a windfall, it is negligence. I think you need some expert legal advice - have you asked CAB what the leaglity of this is?

 

Just found this - not sure if it helps: http://www.fieldfisher.com/pdf/pi-Medical-negligence-Compensation-benefits.pdf

[RaeUK]

... I DO NOT feel that for an amount of 30k that I am being particularly 'dishonest'...

Eh? Have to disagree. Housing Benefit is a means tested benefit that is in place to help those on a low income with minimal savings. If you are in receipt of HB then it is your legal duty to inform your LA of any change in financial circumstance. The alternative is to commit fraud.

 

EDIT: That said, you might need to seek further advice and I would suggest actually talking to your LA about the matter. They have a long list of exemptions to HB calculations which can include 'compensation held in trust'.

[Kutter]

Thanks for the link... It's confused me even more. There was never any suggestion that the DWP might be paid by my compensators... That document just confuses the matter further (well for me it does)

 

I have asked my solicitor for help, he has arranged for me to see one of his colleagues who deal with this kind of thing. He suggested a trust also.

 

Thanks for your help all.

 

And RaeUk... I know I came here asking for advice and opened myself up to your direct disagreement. What you have to understand is that I'm here because of this moral 'grey area' I could have just claimed nothing to anyone, said nothing to anyone and 'probably' got away with it.

I am not that sort of person, I feel an obligation to be 'honest' and while I cant disagree with the grounds that you disagreed with me on, I am of the mind that this money should NOT change my financial situation. I mean look at it this way. I suffered BOY DID I SUFFER at the hands of incompetant staff at the hospital... You have to understand that this money isn't even close to the 'apology' that I wanted. If I were in the USA I would have had a multi million pound pay out.

 

My ability to see this as not being dishonest stems from the fact that this money is for something completely out of my control. Its a payment that I damn well feel I am entitled to. I don't see why it should change my finacial situation at all. (I'm not explaining this properly - the words are difficult to express how I really feel. Bottom line, Is I dont think I should have a penny of this money taken away from me by ANY means - I hope you can understand that?)

 

Kutter

[RaeUK]

But my point, Kutter, is that it is not a 'moral grey area' at all, it's very straightforward. Of course I understand the sentiments that lie behind your post but unfortunately that doesn't change anything.

[Kutter]

Indeed.. It's looking like I'm going to have to lose a massive bulk of it after all.

[RaeUK]

Not necessarily. Not sure if it's a long shot or not, but follow up the notion of 'compensation in trust' disregard for HB.

[Kutter]

Ok, so I've looked at these 'trusts'. As I see it, I pay nearly a 1000 bucks to someone to 'launder' my money!

 

I mean talk about morally grey areas!! You can circumvent the need to 'declare' the money by setting up a 'trust'! LOL.. The worlds rules make me laugh!

 

Trust fund it is then.. I stand to lose much more if I dont.

 

Thanks for your help all.

 

Kutter

[id6052]

First, this is not a grey area.

 

Where a person is in receipt of Housing Benefit, you have a duty to notify changes that might affect your entitlement.

A failure to do so, could result in legal action and a criminal record.

 

Second, I will assume you are of working age.

 

Paragraph 14 of Schedule 6 of the Housing Benefit Regulations 2006 allows for the following capital to be disregarded: -

 

Where the funds of a trust are derived from a payment made in consequence of any personal injury to the claimant or claimant's partner, the value of the trust fund and the value of the right to receive any payment under that trust.

 

I would advise getting professional legal advice and look into creating a trust to hold the funds. You would still have to declare the capital, but if it meets the above condition, the Council will disregard it, and you avoid unnecessary worry or risk of legal action against you.

[SabreSheep]

First, this is not a grey area.

 

Where a person is in receipt of Housing Benefit, you have a duty to notify changes that might affect your entitlement.

A failure to do so, could result in legal action and a criminal record.

 

Second, I will assume you are of working age.

 

Paragraph 14 of Schedule 6 of the Housing Benefit Regulations 2006 allows for the following capital to be disregarded: -

 

Where the funds of a trust are derived from a payment made in consequence of any personal injury to the claimant or claimant's partner, the value of the trust fund and the value of the right to receive any payment under that trust.

 

I would advise getting professional legal advice and look into creating a trust to hold the funds. You would still have to declare the capital, but if it meets the above condition, the Council will disregard it, and you avoid unnecessary worry or risk of legal action against you.

 

be aware not declaring it will land you at somepoint in a courtroom.

 

i appreciate the sentiment. I too am in a similar smaller situation. Just got compensation but also made unemployed.

 

there are also rules on disposing of capital and assets to be able to pass for means tested benefits. The trust option n disregard is worth investigating.

 

in my situation I have opted to use my funds to clear debts which means it will not interfere with my hb claim.

[estellyn]

I've seen many clients presenting to our service having been called in for an interview under caution for capital they didn't declare. I've also heard the 'we felt it was our money and we deserved it' excuse.

 

Do it legal and above board or in a few months or a few years you'll both be scared witless over a prosecution.

 

It's a means tested benefit, meant for those who have no other way of keeping a roof over their head, to not declare it is fraud.

 

And to clarify, 30k should last way more than 6 months!

[Conniff]

A question please estellyn.

 

 

Is someone in kutter's position expected to come off benefits and not use the funds to clear debt?

If they do come off HB and then pay off their debts, can they then reapply for HB if they still qualify?

[id6052]

Conniff

 

If a person ceases to qualify due to excess capital, and then disposes of the capital and re-applies, they will be expected to explain how they have disposed of the capital (and provide proof of the disposal).

 

If the Council believes that one of the reasons for disposal of the capital was to secure or increase benefit entitlement, the Council can treat the person as if they still hold the capital.

 

For example, if somebody receives £25k, then uses £5k to adapt their home to meet disability needs and also gifts £10k to each of their 2 children and reclaims benefit.

The Council may decide that for benefit purposes, the person still has £20k and is not entitled to Housing Benefit

[Conniff]

Thanks id. What I'm trying to say it that clearing debt is not really a frivolous use of the funds, so will they be penalised, (which is what it amounts to) for using the funds in that manner ?

[id6052]

There is no right or wrong about what people can spend their money on - that is their choice - the test is whether they have done it to gain benefit.

 

Repayment of debts is difficult as the rules are different for pensioners and working age claimants. and the final decision would be down to the specific DecisionMaker

 

For pensioners - repaying of debts is accepted

 

For working age - repaying of debts may be accepted or not - the DM may consider whether the debts needed to paid off in full at that time - or could the person have continued to repay in instalments - so a lot could come down to:

1 the explanation provided

2 the timing of the repayments and the new claim

3 other household circumstances

[Conniff]

Ok, I see that. Thanks, a good explanation.

[Surfer01]

I am surprised you get a Housing Benefit if your wife is working? You need to declare the amount you have received as it will pop up on their systems at some point. Lump sums are generally ignored, but savings are taken into consideration and I think the maximum is £10000 and then after that it is about £1 for every £250 over the £10000.

We as a couple unable to work due to disabilities got a £21000 inheritance and used it to pay off various debts taking us well under the £10,000 threshold. It was declared to the DWP and the Housing and Council Tax benefits team and we continued to receive the benefits.