Back dated benefits leading to the cancellation of debt relief orders.

[Davman]

Hi, I wonder is anyone knows the law regarding back dated benefits being counted as an asset, which result in the official reciever cancelling a debt relief order? I'm on Universal Credit and I was given a back dated payment of Universal Credit as I have been classed as having limited capacity for work and work related activity. So this money is because of my medical condition, yet the reciever said that because of this back payment I now have over £1000 in the bank and that he is going to cancel my debt relief order.

[Setmefree3]

What if I get a lump sum of money during the moratorium period?

Receiving a lump sum of cash or a valuable asset may affect your debt relief order. This is because a DRO is granted on the grounds that you don’t have the financial means or assets to pay your debts off.

If you receive a lump sum or any assets of value while you're on a DRO you MUST let the Insolvency Service know about it.



Lump sums could come from:

• An inheritance
• Winning the lottery (you never know!)
• Compensation from an accident
• Backdated benefit payments
• PPI reclaims

If you receive a lump sum or an asset during your moratorium period, your DRO shouldn’t automatically be revoked (cancelled) as long as:

• The amount is less than £1,000
• It's worth less than 50% of the total amount of debt you owe
• You tell the Insolvency Service DRO Team within 14 days of receiving it. If they find out this information from someone else they WILL revoke your DRO.

If the amount is £1,000 to £1,850, the Insolvency Service DRO Team will make a decision based on your personal circumstances.

If it's worth more than £1,850 your DRO will normally be revoked.

[Davman]

I did tell them, thats why they are cancelling my DRO. All the debt websites and advisors and I consulted a lot said that... A lump sum from benefits back-dating

"These may sound large but they are often not a problem because this treated as “income” over the period the back-dating relates to not “capital”. So the question is would you have exceeded the “spare income of £50” limit if you had been getting the correct amount of benefits all the time.

If the benefit is a claim for disability (PIP, DLA, AA) then an extra cost line for the disability would also be included in this re-calculation. So in 2018 the government is reviewing a lot of pip awards– if you get a backdated sum for this, it shouldn’t make a difference to your DRO as any disability benefits you receive should be offset with an expenses line labelled “adult care costs” or something similar. the net effect on your “disposable income” is then zero."

My DRO is being cancelled 3 weeks before it was due to finish. The back dated benefits I have recieved are because of illness and should have been paid to me well before the 21 months that I had to live on the basic rate of Universal Credit.

So what I am doing now is buying white goods and other things that I need for the house with the intention of making a final offer to my creditors of !8%. If they do not except this then I will have no option but to go bankrupt and with that in mind I'm not buying flat screen TVs or anything that could be taken off me at a later date.

[Amethyst]

Tagging Debt Camel as she may know how these backdated benefit payments SHOULD be treated by the OR.

[Setmefree3]

Something in the system is not right!! Universal Credit is floored and those claiming it are suffering beyond belief. I guess your back payment is due to an appeal, and as ESA is means tested you have fallen foul of the red tape.