Disability benefits such as Disability Living Allowance (DLA), Personal Independence payment (PIP) and Attendance Allowance (AA) are meant to cover the extra costs you get because of the disability. So is it right to use this extra money to pay off debts? Can your creditors make you do this?
That may sound a bit abstract, but it leads to a very practical question – if you need a Debt Management Plan (DMP) or an IVA, then you show your creditors your income and expenditure details so they can assess whether the monthly payments you are offering are reasonable. Should you include any disability benefits as “Income” on the information which is sent to your creditors?
On the one hand you don’t want to lie about your finances, on the other hand you do have extra expenses because of the disability and it can be difficult or sometimes embarrassing to have to explain these.
Handling disability benefits in debt management
There are two alternative ways – they both give the same end result. Whichever you choose, you will need to inform your creditors what you are doing and why.
The first approach is that you don’t include the benefits as your Income but you also exclude any costs associated with the disability from your expenditure. Then in your cover letter if you are setting up a DMP, you should explain this, for example “My 12 year old son suffers from Autism and gets Disability Living Allowance, but I have haven’t included this as Income and I have also left out the additional expenses which that income covers.”
The second approach is that you include the benefits as income but you add extra lines to your Expenditure with details of what the additional expenses are. This is the approach a debt adviser will usually take.
Which alternative is better for you may depend on what the extra costs are. If it is very clear what the extra costs are, then the second approach may appeal. But it is a sad fact that people often find the costs associated with a physical disability easier to understand than those with mental problems such as autism.
Even with physical conditions, the disability benefits are there to help you manage the situation in the way that is best for your family and your choices need not be the same as the ones other people might make. So if you are exhausted being up several times every night with a distressed child, choosing to employ a cleaner isn’t a luxury at all – it’s what you need to get by. If you may prefer to adopt the first approach and not spell out what the extra expenses are, it feels less as though you have to justify yourself.
I would like to use some of the money to speed up my DMP
That’s your choice. But think twice about this – very often you may have been spending less on replacing/mending/cleaning things around the house because the disability money that was meant to help you has been going to the debts.
It’s less of a worry with a Debt Management Plan than an IVA (see below), because if your circumstances change then you can just change the DMP payment. This page looks at how far you should try to cut back to speed up debt repayments, but if you are comfortable with what you are proposing, then fine.
Of course, also make sure that your DMP will go as fast as possible by not using a commercial DMP firm that charges you fees!
Setting up an IVA
You need to discuss your disability expenses in detail with the Insolvency Practitioner (IP) you are talking to. This is not like discussing your debts at a Citizens Advice Bureau – the person you are talking to at the IVA firm is unlikely to know much about benefits or disabilities – they aren’t going to prompt you for things you might have forgotten because they don’t know enough about the area.
Too many IPs seem to start off by assuming that the standard guidelines for expenditure should apply to all families. It may help if you have a think about your additional costs before your phone call and make some notes to work though.
You need to think about things which you and your family do that wouldn’t be needed if it weren’t for the disability. A few examples:
- Your utility costs may be high, but electricity powers your wheelchair, your electric bed, your hoist etc and the heating has to be on a lot.
- Your IP may not think that you need to take your autistic son swimming several times a week, but you know that being in the water is relaxing for him and lets him work out the stress that being at school tends to induce.
- Your IP may think your expenditure on hairdressers is excessive, but your arthritis prevents you from washing your own hair, etc.
Although there are standard guidelines for acceptable expenses in an IVA, there is no reason why your expenses can’t be higher than the guidelines and additional expenses can be included if there is a good reason for them.
If you feel you are being pushed to pay more than you think you can afford, then don’t feel you have to agree because the IVA payments will be lower than those on your debts. Five years is a very long while to live on an inadequate amount of money and you may find your expenses increase during the term if your condition gets worse or as the children get older. IVA payments are not very flexible, you can’t assume they will be decreased later if your expenses go up.
Instead, you could try talking to a different IVA firm – try contacting StepChange and talking to them about it. And also look at the alternatives to an IVA.
If you don’t have a house with equity in it, you should look at bankruptcy or a Debt Relief Order (DRO) as these may be much better options for you, see below.
But if you have a house with equity and an IVA looks like your most sensible option and you feel you can afford the amount being proposed as the monthly payment, even though that includes some of your disability benefit money, then that is your choice. There is no rule which says that you can’t spend the money in this way if you want to.
Benefits and bankruptcy / DROs
In bankruptcy, if you have “surplus” income each month, you have to pay that to the Official Receiver for three. years. The rules used to assess what surplus income is are published in detail. Here is an extract from the benefits part:
“A [monthly payment] should not be sought where the bankrupt’s only source of income is state benefits. In the context of this chapter “state benefits” refers to all forms of income supplement and support provided by central or local government including … disability living allowances …. ”
Where you have some other income in addition to your benefits – perhaps you work part-time or have a pension early on ill health grounds – the benefits income is included as income but the Official Receiver should allow additional expenses for the extra costs of your disability.
Occasionally an OR will suggest that your expenses are too large and you can afford to make a monthly payment (IPA) for three years. If this happens to you, go and ask your local Citizens Advice for help – they will be able to write to your OR and explain your extra costs and that the OR should take these into account, because if they don’t they will be in breach of the Disability Discrimination Act (1995), which is now part of the Equality Act (2010).
In a Debt Relief Order (DRO), DLA or PIP is counted as “income” however there will be a line added into your “expenditure” that is the same amount for your “disability expenses” – this is often labelled something like “adult care costs”. This means that you will often pass the “not more than £50 a month surplus income” test for a DRO, even if you are currently paying more than that amount to your creditors.
If all your income comes from benefits, you will definitely pass the DRO spare income test and will not have to make any monthly payments in bankruptcy.
So the government agrees that disability benefits are required for everyday expenses and shouldn’t be used to pay your creditors.
Uniform and other school costs
Choosing between an IVA and bankruptcy
Articles about debt management plans
jean says
I understand more now…..me and my husband have severe disability we r able to pay our debts but companys say we have to use our disability money to pay extra on the debts leaving us with little or nothing financially….i am 66 husband is 67 this is making us both ill…I have mental health problems my husband takes drugs for depression both besides other illnesses,,,,,,,,,,,,thankyou
Sara Williams says
Hi Jean – unfortunately some creditors are not good at dealing with people who have mental health problems. I’ve written a seperate article about what you can say to them https://debtcamel.co.uk/debt-mental-health/ but in your situation I think you should phone StepChange 0800 138 1111 – they are a charity and can help with all your possible options.
jean says
thankyou for your reply…….you mentioned stepchange i am with these at the moment .im due a review and when they see we have disabilty money award to us they will want to take more money off us……..my daughterinlaw will take care of my payments to my debtors,im having panic attacks with it playing on my mind……thnakyou.x
Eli says
Step change will also take your disability money into consideration as well. They class the severe element of ESA and DLA/PIP as income, when they are not. CAB won’t.
Sara (Debt Camel) says
Well they *are* income – but there should be an allowance for the costs of the disability on the expenses side. If you feel they aren’t being properly considered in your case, ask for it to be looked at again.
MSW says
If they were income, you’d be taxed on them. Some charities might try to use them as income, but they are there for your needs as a sick/disabled person.
Sara (Debt Camel) says
I’m not saying they should be used to pay an IVA. But if someone doesn’t want to go bankrupt – perhaps because they have a house with equity – then money has to be found from somewhere to pay an IVA. Bankruptcy or a Debt Relief Order is usually better as anyone only on benefits, including disability benefits, will not have to make any payments at all.
Maryann says
I’m but 10 months into my IVA and last week I found out Harrington Brooks are not paying my creditors a penny until their fee was paid. I asked what the amount of the fee was, after sometime the rather shock call taker told me that their fee was £2250,56. I then got told after 3 years my creditors would start to get paid. I had no idea nor were I told the amount their fee was going to be. I’m severely disabled with mental health and anxiety. I owed just over £5000 am disgusted how they can take advantage of vulnerable people who don’t want debt hanging over my head hence I chose a IVA. I had to do most the work sending off letters from creditors and I now feel like a mug for trying to do the right thing.
Sara (Debt Camel) says
Hi Maryann, if you are renting then changing to a Debt Relief Order might be better for you. Your local Citizens Advice Bureau is a good place to talk about your options – they are very friendly and know how mental health problems can make handling debt difficult.
Mary Murphy says
I’m after getting the same result with Harrington Brookes and they do not pay our creditors for the first three years. I going to be with them 3 years this October and I’m still receiving other IVA calling me asking about my debts. I hang up as I too feel like a mug for doing the right thing by honouring my debts but it’s the IVA who get most of the money and I also choose a IVA as I didn’t want paperwork to do but I ended up doing all the work. I’m now considering cancelling my bank card as I am not a mug and I sooner stop it now instead of October 2022.
Sara (Debt Camel) says
Hi Mary, how much are you paying a month? is it a struggle?
david says
I have a single debt, I am currently paying £20 per month. I am being asked about my income, I receive esa and dla. Do I need to let creditor know of dla? If I let them know, can they demand a bigger payment.
I have terminal cancer and also wonder if I die will my debt pass to my dependants?
Sara (Debt Camel) says
Hi David,
I am sorry that you are having to worry about debt at a time like this. I suggest that you tell the creditor about the DLA but explain about your cancer and that the DLA is covering your additional costs. It might help if you could include something such as a letter from your doctor or simply a copy of hospital appointments as “evidence”. I would be surprised if in these circumstances they ask you to pay more, but if they do, ask your local Citizens Advice or Macmillan Cancer Support for help in replying to them.
Debt isn’t passed to your dependents. However if you are leaving assets such as savings or a house, then your debts have to be repaid before the rest is distributed according to your will. If you don’t leave any money, or there is only enough to cover your funeral, then your debt will effectively die with you. Citizens Advice will also be able to advise you on this.
gary says
hi ive just been ask by my creditors that I need to do an income check do I need to include my wife’s dla into my income as the debt that im paying was mine before we got together im paying them £5 a week as I am on a low income and work once a fortnight as im my wifes full time carer
Sara Williams says
Hi Gary, I would leave it out but if you are asked to list your expenditure, then obviously don’t include the expenses that your wife’s DLA covers.
sharon says
Please could you tell me do I have to use my pip,to pay my ccj,for water rates??I’ve been asked for three bank statements I’m on ESA.
Thank you.
Sara (Debt Camel) says
Hi Sharon, The simple answer about the court forms is that you should include your PIP money but also include the extra costs you incur because of your disability. Citizens Advice are good at helping with this sort of thing.
Many water companies have special funds that could be able to help in these circumstances – your local Citizens Advice could help you apply for this as well.
sharon. says
Thank you Sara.
You took the fear of county court judgments away from me..i contacted my water supplier directly and explained i have had heart surgery and wasnt well enough to live alone so letters piled up.so they have been amazing.i now pay them every month a regular amount.and the worry is of my shoulders.
thank you so much.xx
hara says
i am about to get a ccj, i get dla for myself & my son do i have to inc both of them on the forms – i’m no good at explaining what i spend my money on ( i’m autistic ) & haven’t got time to get help as i haven’t been opening my post till now .. is there anyway to stop a ccj if it’s at court in the next few days without paying the full amount .. ? i suffer from depression , mental health & lots of other medical conditions . thank you if you can help xx ps i have other creditors i owe …
Sara (Debt Camel) says
Hi hara, I suggest you call National Debtline 0808 808 4000, they can help you sort out monthly offers to the CCJ and any other debts and what to put on the court forms. Good Luck!
hannah says
My husband has an iva in his name for his debts. I now recieve dla on behalf of my 6yr old daughter but also my tax credits have gone up due to the child disability element will the iva company take this into account at his next review which is due now? I am also receiving careers allowance will this be taken into account aswell? I am really worried the payments will go up by alot? Thank you. X
Sara (Debt Camel) says
Hi Hannah,
your husband will need to talk to his IVA firm about this. What should happen is that they note your income has gone up, but this is to cover the additional costs you have from having a child with disability and being a carer – so his payments shouldn’t increase.
Jacqueline says
I have recently had my appeal for PIP granted at a tribunal, which has taken over a year and a half since first plucking up the courage to apply. I have been unwell with a long term health condition for over 4 years. At the tribunal it was recommended that I was backed dated 2.5 years payments. Which is good news as My family has been really financially struggling, but I am very concerned as I have recently (Jan 2016) been grated a DRO (Debt relief order) I am really worried that when I find out exactly what I will be pain and let the insolvency service know they will either take it away or give my debts back. But even with these extra PIP money, surely it is meant to help me with my health regardless of what’s backdated. I hope you can help. I had thought of going back to my local CAB but thought I’d try here first. Many Thanks.
Sara (Debt Camel) says
Hi Jaqueline, well done on the tribunal win! For your DRO, the backdated payments are treated as “income” spread out over the 2.5 years, not as a capital sum so this usually isn’t a problem. You will need to go back to CAB (assuming they they set up your DRO). This will need to be reported to the DRO unit, but the adviser will also supply a new Financial Statement looking at your recalculated income and the additional expenses you will be allowed because of your disability.
Jacqueline says
Yes the DRO was set up at my local CAB so I will make a appointment with them.
Thank you for you help, much appreciated!
Alexandra says
Hi my housing association want a full report of all money coming in to my house .myself & 3 of my boys are all on disability and they have said I need to put there dla down as well because they live in house so need a roof over there heads . I really don’t understand that they can do this also my son gets his money into my account because I’m his appointee and they have also said they will use that as income as well ..thank you
Sara (Debt Camel) says
Why is your housing association asking for this? Do you have large rent arrears? Are you on housing benefit? How old are your sons?
Alexandra says
I have arrears as I am in middle of appeal about my housing circumstances .
I have this appeal next week but they have told me I need to go to court on 20th July for eviction for me my 3 older sons (twins 24, 16) and myself ..I also have my youngest son who is 9 but he hasn’t got eviction letter .
i have tried to explain to them I will pay as much as I can afford but I feel I’m being bullied by these people I can’t sleep ,eat with worry .my boys are all autistic 2 youngest also have wheelchairs .
i have asked if I win my appeal will I still need to go to court and they have said yes I’m so scared I really don’t know what to do.
I am on full housing benefits but they have only awarded me from January of this year .i have provided all letters ,documents I was asked to provide but they won’t accept them.
Sara (Debt Camel) says
I think you need urgent advice from a specialist adviser. I suggest calling the Shelter helpline https://england.shelter.org.uk/get_help/helpline, it’s open at weekends.
Ceilidh says
I am a separated mother with several physical, mental and neurological conditions and I receive PIP and benefits for my daughter. These are my only income and I use 85% to pay for debts (hire purchase, loans, debt made in my name that I was unaware of etc) and I live payday to payday and I barely have enough to support both myself and my daughter… It’s got to the point I’ve had to ask family members and do a few things I’m not proud of to get by ?… I have tried debt helplines and C.A.B and failed miserably… My mum and aunt have suggested bankruptcy but I have no clue how it works, reading the information is confusing and information from a person is difficult due to limited hearing. Any help would be appreciated. x
Sara (Debt Camel) says
You really need someone to help you look though your options in detail. Most debt firms work on a telephone service, but it doesn’t sound as though this will suit you. Face to Face would be best, if you don’t want to go to your local CAB, I suggest you contact CAP https://capuk.org/i-want-help/our-services/cap-debt-help/introduction.
Tim says
Can the courts take money from my pip
Sara (Debt Camel) says
Hi Tim, that is a bit of a general question. If you are trying to fill out the Income & Expenditure details on a court form, because a creditor is taking you to court for a CCJ, then this article may help https://debtcamel.co.uk/ccj-monthly-payment-form/.
if your question refers to some different court process, I suggest you call National Debtline 0808 808 4000 who can talk you though what you need to do and what is likely to happen.
Adam says
Adam Hi I’m on DLA threw injuries and mental health problems I’ve been on an iva for around a year 5 months ago I was awarded pip I didn’t inform my iva due two me thinking that’s for my disability n help needed by me now they have asked for there yearly checks 3 months bank statements it’s gunna show this will they zap my money or stop iva or want backdated money what dose concern me is I have done odd buying and selling on line to make ends meat which would be shown I only have 2weeks left to produce these documents what do I do thanks
Sara (Debt Camel) says
Well you have to provide the documentation they have asked for asap. Your IVA won’t be cancelled but they are likely to want to increase your payments a lot because of your extra income :(
For the money you have already received, they should be able to arrange to extend your IVA by a few months to let you pay back the extra.
If you have extra costs because of your disability which you feel weren’t being taken into account before by the IVA then you should ask for these to be included. For example, you may have extra transport, heating costs. Or you may need to buy extra things or pay for extra services because of things you can’t do. And of course your costs may have gone up from last year. If you need help working out what your costs are to tell your IVA firm, go and talk to your local Citizens Advice.
It may be that your IVA firm says you have to pay an amount which is more than you think you can manage to live on now you have had experience of this. In that case you should also talk to Citizens Advice about your options if you let the IVA fail.
Lesley says
Hello.
I have recently had to go bankrupt and am in receipt of the enhanced rate PIP which i have been getting since May 2015, previously i was getting Income support for a back injury. I have now been diagnosed with several other medical problems, and have just been awarded the enhanced Mobility allowance on top of the PIP. This is to be backdated to June (aprox’ 22wks). I understand that as a rule the mobility is not touched for debts, but can the can the lump sum back payment be taken?. The intention was to use this lump sum to buy a mobility scooter, and then the weekly payments to get a car. Any clarification would be appreciated thank you.
Sara (Debt Camel) says
Hi Lesley, do you have any income which is not from benefits?
Susan milligan says
Hi, I’ve got an Iva now for about year but the last 3 months a go I’m on long-term work sick leave at the moment, I’m about to clam pip because of my health, I have been told that my condition won’t improve, I am hoping to go back to work . What I would like to know will I have to pay pip to my Iva , as I pay for all my medical prescriptions , etc , etc because I’m working , I don’t want to get my self into any trouble .please help.
Sara (Debt Camel) says
Hi Susan,
sorry to hear about your health problems. Are you renting or buying?
Jack says
I was recently questioned by DWP about overpayment of ESA between 2014 and 2016 to the tune of 4 grand I failed to inform them that my wife had been granted a visa to stay in UK and was working full time. My understanding of the immigration rules and the advice given when I first claimed ESA was that I could claim as a single person which I did. I then went onto to recieve enhanced rate PIP “daily living allowance” because I have health issues Ischemic heart disease,COPD and non epileptic seizures. after a recent assessment DWP took away my Daily living allowance and replaced it with Mobility component enhanced rate. which left me worse off than before. as I cannot claim ESA anymore because my wife works I don,t know what to do Debt Management want 109.00 per month out of my PIP Mobility to repay them back which is half my benefit per month. Though my wife contributes to the household I have to find monies for other things like Gas and Electric which is around 80 a month I have Funeral plan with sun life and home insurance. I,m left with nothing to survive on. can I ask the Debt managemnt to postpone any plan for repayment till I ask DWP for mandatory review on my Daily Living allowance or amd I in severe difficulties as I see it.
Sara (Debt Camel) says
Hi Jack, have the DWP finished their investigation and if they have, have they decided whether they consider this was fraud? (NB I’m not suggesting it was, just asking what the DWP say.)
Also are you buying or renting? And do you have other debts?
Nuala says
Hi I have recently gone for Iva, the creditors have asked to extend my 5 years to 6 years. Which I have agreed to. However as I am a single parent , having no contact with my child’s father for over 3 years. I receive no maintance, which suits me as we don’t see him. The creditors have asked for a percentage of the child maintance.
Can they do this when I don’t receive any and certainly don’t want contact with the father?
Sara (Debt Camel) says
Have you actually signed up to an IVA yet, this sounds odd? Why have your creditors asked for 6 years – how large are your debts? Are you buying or renting?
Nuala says
Hi
I am actually renting £500 per month. My debts are £22,000. I was told it would be 5 years. But received a call saying a meeting took place with my creditors and they asked to extend the 5 years to 6 years. That also 1 of the creditors has noted I had a child and asked for a percentage of child maintance . Which I don’t receive as I have no contact with the dad.
Sara (Debt Camel) says
Have you looked at bankruptcy? Because it sounds as though that might be a much better option for you. Talk to National Debtline 0808 808 4000 and see what they say.
Avo says
A question relating to other benefits and bankruptcy…I’ve just received a backdated Severe Disability Premium (ESA top up as on PIP too) and I am aiming to go bankrupt in May/June. I’ve been advised by a money advisor just to use this money for essentials as I have just been given permanent accommodation having been homeless.
edited – I’ve written an article to respond to Avo’s question – it’s here: https://debtcamel.co.uk/spending-money-before-bankrupt/
Avo says
Thanks so much for all of that information Sara. It’s really reassuring and I’m pleased that I can do a little to kit out the flat a bit. I was so worried that I’d have to pay the creditors with it instead. Phew. Rugs, here I come! Have a nice weekend.
Avo
Jill Sullivan says
My husband is unemployed no benifits I’m claiming pension credits for him I am on pip if we go bankrupt will we loose our home I’ve been awarded high mobility
Sara (Debt Camel) says
Hi Jill, some of your comment was a bit garbled so I’ve made some guesses as what you probably meant. Could you check it reads OK?
Do you have a house with a mortgage? If you do, does it have much equity?
JLC says
If a child under 18 receives DLA which is paid into parents account, can an IVA company take this into consideration as income for the parent
Sara (Debt Camel) says
Yes, but they should also take into account additional expenses you have for the child because of their disability. Are you buying or renting?
Jlc says
Home owner! Does that make a difference
Sara (Debt Camel) says
Yes, if you were renting then you should have been looking at bankruptcy rather than an IVA. It’s much easier to get things like disability expenses handled properly in bankruptcy. Do you currently have an IVA or are you just looking into one? Have you been talking to a firm?
Vicky says
Hi, my mum is being ordered to court due to a finance agreement with Santander not being resolved. Her only income is benefits, high rate DLA, state pension and pension credit. Will the court order her to use her benefits to pay the creditors? She is unable to speak for herself due to a stroke so I am really concerned about this. I suffer with depression and anxiety and am finding it really difficult. Any help would be really great. Thanks
Sara (Debt Camel) says
Hi Vicky, that sounds very difficult for your mum. Can I ask a few questions?
By “being ordered to court” do you mean a solicitor is threatening court action? Or has she received a Claim Form? Although it’s possible to be “ordered to court” it’s very unusual and I am hoping it hasn’t happened to her.
Also, does she have other debts as well? Is she renting or does she own her house?
Vicky says
Hi, thank you for your reply. She has to attend county court for questioning over her finances and means of repaying the debt. The letter is titled ‘order to attend court for questioning’ and was hand delivered to her at her home. She is renting a housing association house and has other small debts such as catalogues and overdraft with the bank.
Sara (Debt Camel) says
Here is some information about this https://www.citizensadvice.org.uk/debt-and-money/action-your-creditor-can-take/how-a-creditor-can-get-information-about-your-finances/.
Is your mum physically able to attend court? It’s important she goes if she can and takes any letters confirming the benefits she is getting, her pensions and bank statements.
Could you call National Debtline 0808 808 4000 tomorrow on her behalf? I’m suggesting this because you say she has trouble speaking. If you could make the call with her there, it would help. They can talk through her whole situation – this Santander debt, her other debts, this court hearing and her options. I don’t know how much her debts add up to, but it’s possible something like a Debt Relief Order could help her, see https://debtcamel.co.uk/debt-options/dro/. National Debtline could explain about this and set one up for her if one is suitable.
Vicky says
Thank you, I will certainly do that. The only way she can attend court is if I am with her but I have a holiday booked for the week of the date. I have tried contacting the court to see if I can change the date but am unable to get hold of anyone.
I have just looked at DRO and it will not be suitable as the debt is more than £20k. I have looked into bankruptcy and think this is an option
Sara (Debt Camel) says
Talk to National Debtline about the problem with the court date.
Lots of info here about bankruptcy: https://debtcamel.co.uk/debt-options/guide-to-bankruptcy/. National Debtline can advise her on that, but living on benefits in a Housing Association property it may well be a good idea for her.
It’s lucky you are there to help her.
Vicky says
Thank you so much for your help. I really appreciate it.
gardner says
hi my x has left I had no mortgage on my house plus my parents left me enough money to do my leeks and other problems I went out with my x I’d not long lost my parents 4 days apart of each other. I was in a very poor mental state he said need a holiday we went to Cyprus then he suggested we buy a flat borrowing my bit of money as down payment then he said he work to pay the rest. in the end I agreed then he said there was no work weekends so still unwell as I had nearly died he suggested we mortgage my house and get rid of the apartment which I lost all my money to pay for the improvement s which he promised to pay he suggested this mortgage which he’d pay for his bit what we lost in Cyprus. the house needed he started weekends again then he said he back gone. but he was alright gardening the he took redundancy by then from him doing 5 weeks a day my dla was paying the mortgage we ended up in a iva which the rest of my dla was took up he said I know I care for you after 2 years this stopped him taking me out. he did nothing in the house expecting my autistic son to do it he couldn’t look after himself not me. my partner sat on his telephone all day. he went to hit me when I asked where my hat was. finally he pretended to take a overdose on ten of my mistake relaxant my son and daughter lost there weekend pay being at hospital with him the doctor said he needed to take 3 times the amount of tablets to of overdosed well he left I’m still having to pay I v a and mortgage his telling everyone his paying it how can I get him to help pay anything half the I v a which is nearly all his I’m having to pay to stop loosing the roof over both my autistic son and me but gas and electric are 150 a month as i live in a valley i have to pay for sky we have no ariel. we are so broke i cant afford to eat why his out there lying his paying it working kobs here and there. i shouldnt even of had a mortgae just because my mental health. normally I’m cautious person. if I was normal I’d never gone there.its happened and I can’t change it. problem is what do I do about the whole lot of this it’s a mess.
Sara (Debt Camel) says
It sounds like a complicated mess. I think you need some debt advice on what your options are – I suggest going to your local Citizens Advice. The options may include letting the IVA fail or asking the IVA firm to agree that your IVA (not his) should be treated as completed. There may be other possibilities as well.
Abbie says
My husband suffers with mental illness and I am his full time carer.We are in receipt of benefits and are on a debt management plan which we pay monthly.Recently my father in law has offered to pay the £10,000 debt off.Do we have to let the DWP aware of this kind gesture.
Sara (Debt Camel) says
Can I ask how long you have been in a DMP?
Vilas says
Hi,
I have come across this site. I have a recent DRO and my wife is in IVA with Payplan we are above 60 and no other income other than benefits which includes PIP and ESA(Support) , carer, H Benefits. Because I have gone with DRO my wife’s annual review for lowering her payment due to affordability is under consideration, however, previously, we have been told by Payplan that they don’t exclude the DLA/PIP and such benefits from income whereas, we have shown the money required to be utilised to overcome the disability as well as our age concerns as we are only two of us living together, this had previously made the monthly payment go higher than affordability and we were made to accept that. What are the actions required to be taken in case the same episode is repeated as we are now in a position to afford the minimum required payment towards her IVA instead of going bankrupt. Please let us know the avenues available for us to make either creditors or the IP to consider that PIP is not a part of income.
Sara (Debt Camel) says
Does your wife own a house?
Vilas says
No, no other assets. No other income too, rented house private furnished
Sara (Debt Camel) says
Then an IVA is very probably a very poor option for your wife, bankruptcy would be much better.
Vilas says
Agreed but what about my main concern about considering PIP payment as income for the repayment for IVA
Sara (Debt Camel) says
PIP is just income. If you have disability costs which are not being taken into account talk to Payplan about these. But in the end if you want to avoid bankruptcy, it is necessary to make IVA payments and some of the PIP may need to be used. I suggest you should talk to Payplan about your wife’s options, including letting the IVA fail and opting for bankruptcy if it is not possible to reach an agreement on the IVA payments which you and your wife feel are realistic, not just for a few months but for the rest of her IVA.
Karen says
Hi
I’ve been declared bankrupt since February this year. We’re in council housing which my husband pays full rent for. I’ve just been awarded DLA & PIP for my health & mobility issues. I am about to inform my OR about this, will they look to take any of this benefit from me during or after my bankruptcy?
Sara (Debt Camel) says
Do you mean ESA and PIP? If so, then unless you (not your husband) have other income as well, which sounds unlikely, the OR shouldn’t want any of this money, it won’t mean you have to make monthly payments. But do tell the OR.
Karen says
Thank you Sara, no other income just the PIP. Will definitely inform my OR, thanks for your prompt reply ?
June says
I have the chance to release some of my company pension, because, I owe the person I live with a lot of money. I also have an IVA. If I take out the money, can the IVA company take any or all of it?
Sara (Debt Camel) says
Yes, they are likely to take all of it. You must not take money out of a pension when you are in an IVA unless your IVA firm tells you in writing it is ok and you can keep it all.
marilyn laurence says
i have an IVA with harrington brookes they have just reviewed mine and my husbands money i was paying £80 they now want £130 i am on PIP £220 and my husband is on £550 for PIP as he had a stroke in 2013 it has left him with dermentier we own our property but are still paying a morgage i am also on carers allowance and my husband is on ESA can they count our PIP as incomb as i am stuglling to pay the £80 let alone £130
Sara (Debt Camel) says
Yes they can count PIP as income but they should take account of your extra costs too. Go back and tell them you are struggling and can’t afford to pay any more and that you want a review of your expenses as you think some have increased.
Glen wilson says
My self and my wife both have mental health problems I have depts of 23,000 involving ten companies in each of them I pay £5.00 a month and I am in the sencetive department.
I have learned over many years don’t let companies bully you as long as you pay something which can be 10p in the crown there is not a lot they can do.
S Jones says
Hello, I have just been made bankrupt. Can the OR use my Attendance Allowance, lower rate, as income or should it not be included? I have a paper form to fill in. Thanks
Sara (Debt Camel) says
Sorry to hear you have been made bankrupt. Do you have any assets, eg a house with equity? If you do, you need some good debt advice very fast as you may have some options if you have just been made bankrupt.
To answer your question, your Attendence Allowance will be treated as income, but it is intended to cover costs that you may have because of your health, so those costs should also be included… If you aren’t sure how to complete this form, your local Citizens Advice is a good place to get help or if you would rather do it on the phone, call national Debtline on 0808 808 4000.
Dawn says
Please can someone help me ..please explain like you are talking to a 5 year old I have damage from meningitis and cannot process information very well,. today I received a CCJ I had filled in a statement of means and offered a payment of 2.00 p/m this had already been set up at 1.00 p/m and had been being paid for 20+ years with no problems then a few months ago I lost my debit card [I lose everything everyday] my friend phoned the bank for a new one which was sent to me but this also cancelled out my payments but I didn’t know that this would happen no one said about it I then started to get calls from Arrow Global who kept saying i owed them money and me keep saying but i’m paying you already …then by a sheer fluke someone not connected to the bank or debts told me that changing cards will cancel payments then before i had a chance to try and put this right I got a form from the court asking for a statement of my paying out costs so I filled it in but I added my dla which they have obviously taken as income because the letter today has refused my offer of payment and wants me to pay 103.49p p/m I can’t do this I have brain scan results showing damage that effects my memory and just 2 weeks ago I was diagnosed with breast cancer and to be totally honest I now feel suicidal.
Sara (Debt Camel) says
Hi Dawn,
I am so sorry this is all happening from such a very small mistake. And at such a bad time for you deal with it.
I think the easiest way to handle this will be for you to go to your local Citizens Advice and ask for their help. They can help in two ways.
1) they can help you put in a new application to change this very high monthly payment.
2) they can write a letter to Arrow asking for the debt to be written off because of your health problems and because you have been paying it for such a long while.
You could do these things yourself (see https://debtcamel.co.uk/debt-options/less-common/write-off/) but I think some expert help would make it easier for you.
Sara (Debt Camel) says
I understand that Arrow has agreed to write off this debt.
jason says
looking for some advice if possible, i have taken advice from cab who advises bankruptcy is way to go for me, i have had a grant to help pay the fees also, there are ME, my wife and 3 kids. I am the only one working Part time. problem i have now is my wife (who does not work) has started to receive PIP payments, will this need to be included in my household income?? As before i had no surplus income, with the PIP payments we now have just over £200 a month extra. Worried the OR will want this for an IPA
Sara (Debt Camel) says
Yes it does go in the income but an extra line for “adult disability costs” can also be included for the same amount – so your disposable income does not increase.
jason says
thats great, thanks sara for speedy reply
kate says
Hi Sara,
thanks for your help with my questions so far – my debt releif order was approved (yay) my new questions/ concerns is:
i currently getting PIP £310 per month my spends is board payments of £250 and £30 for my mobile phone(from the low payments i have not put things down like clothing prescriptions food gas electric) Stepchange put in the rest of the money as care costs from my PIP. As you have probably seen in the news PIP is getting reviewed and i beleive this is going to affect me meaning my payments will go up and potentally backdated – I do know I have to let the IS know about these changes but will this revoke my DRO?
also, i have been told about another benefit i could apply for ESA (contribution-based) should i apply for this? i dont know what the IS or stepchange would see as care cost but before i was unwell i was paying £400 board i was buying food paying gas and electric but now i dont have enough but this is now causing issues with my partners income and outgoings. I hope I have explained this ok, Thank you
i will also post this on MSE forum
Sara (Debt Camel) says
Hi Kate – good that your DRO is underway. Yes you will have to let the IS know about any backdating of PIP but this should not affect your DRO. Disability benefits backdating is treated as though it should have been “income” over the period the backdating is for. And although this means your income will be higher, you will also be able to claim higher expenses for this period so it will be cancelled out.
The ESA you need to talk to StepChange about – I think it will be OK because effectively your expenses are too low at the moment, but best check and get this one right. NB this is only a potential problem because it is “contributions based” ESA – there would be no problem with income based ESA.
kat says
Hi… I received PiP daily component and child benefit .. I was getting paid from work but this has stop.. I have been granted a DRO and they have included my PiP and CB as an income plus my wages (wages stop)…
Now i have made a claim for universal credit and i dont knw how much they gonna b paying me..
I have a partner and his income was included in the DRO.. but they made it in way that i contribute less than him which is not very accurate as we share all our expenses together..
Is it right? I went with stepchange
Sara (Debt Camel) says
If your only income is now from benefits, you are unlikely to have a problem moving from one benefit to another, especially if your income has actually dropped. If you don’t get more income, it doesn’t really matter how your household expenditure was divided for your DRO, but if you are unsure, go back to StepChange and ask them?
Masoud says
Hi
I’m on dro and I have another 6 months ahead to end of my dro period. When of applied for my DRO I was just on benefits ,universal credit and PIP. Now I’m going to start a part time job which is 8 hours per week and minimum wedges . Do you know if I start that job then my DRO will revoke or not? Should I include my pip as an income ? I have to mention my universal credit income was based on work related (limited capacity for work). Shall I report y change immediately to official receiver or I can wait to see how the new job effect my benefited first? Thanks , Masoud
Sara (Debt Camel) says
PIP is treated as income, but an additional line of expenses for disability costs is allowed so they cancel out and don’t affect the amount of “spare income” for the DRO calculation.
Yes it’s best to tell the OR as soon as you are paid.
You are right that your UC will be affected, also possibly your council tax support if you get that. Can you go back to the adviser that set up your DRO and ask them whether the job will affect your DRO? They know your full circumstances.
Jay says
My mum is my brothers appointee and my brothers pip and eesa get paid into my mums account, would she need to count his pip and eesa as income when applying for a DRO. My brother is 24.
Thank you
Jay
Sara (Debt Camel) says
Does he live with her and she buys everything for him?
May says
Following as I would like to know if I need to have my husband inform his IVA that I get PIP. I am not on the IVA but recently due to health changes I’ve been granted PIP. We split the bills/food/child expenses half half even though we have our own separate banking accounts & finances. TIA
Sara (Debt Camel) says
how far into the IVA is your husband? If he is past the first anniversary, was he asked whether your income had changed at the annual review?
You have a good case for saying the extra income you now have is because you now have extra costs associated with your new health problems.
May says
Thank you. He started his IVA in November 2019. His review should be soon I think.
Sara (Debt Camel) says
oh so he has only just started the IVA. If he looks at the paperwork he was sent, that should say if he has to report changes to your income.
How has the IVA been going? Do you have a house or are you renting?
May says
We are renting. The only thing he can find in regards to income amount it says he has to stay under his retention amount of 1315 a month before they start taking 50% of any income after etc. He is unsure what counts towards income especially because I now have PIP and our son has lower rate disability paid to him as he is the main carer. He also may become a carer to one of us if granted in regards to carer element. These will definitely bump him above the retention amount if they consider my PIP and the DLA plus the carer element once he gets approved. I hope this helps.
Sara (Debt Camel) says
How large are his monthly payments? Does he own a car?
May says
100 p/m. No car.
Sara (Debt Camel) says
ok, was there a reason he went for an IVA rather than bankruptcy? Were extra expenses allowed because of your son’s disability?
May says
I think he felt like it was the best option for him as he didn’t have the money to start a bkrptcy and making payments was best option when we had complications with our son for two months it ruined him as he couldnt work and he fell behind on bills. He does not know about the extra expenses. This is all new to him and he has no clue what any of this means. I’ve gone through his email and looked at the monthly income and expenditure sheet and it doesnt list any amount under Expenditure. Under personal cost it has partners credit commitments. No where on the sheet does it say anything about expenses allowed for my sons disability probably because we just only applied for it as we didn’t really know we could get support for him after the operations. Could that be the reason?
He has written to his IVA person and will await his reply for tomorrow. I think its best if they just revisit our entire household income and recalculate whether we should pay more as at the moment we have so many things going on with added benefits due to two peoples health conditions within the family and alot has changed so fast.
Sara (Debt Camel) says
ok, remember that extra money is meant to help your family, not pay his debts… but see what they come back with. If they say he will need to pay much more, then it may be best for him to talk to National Debtline on 0808 808 4000 about his options. As it may be he would qualify for a Debt Relief Order or that bankruptcy would be better than an IVA.
But one step at a time. If they say he doesn’t have to increase payments you may feel he will be able to manage the next 4+ years ok.
may says
Ok, do they tend to repossess his household items if he did ever change his mind to file bankruptcy. He literally had nothing valuable but worried they will come and reposses the little things he has. Sofa, TV, computer, washer, dryer, fridge. Things of that sort is probably another reason why he has put him off from considering bkrptcy. Thanks for all your help today. We will see what they say tomorrow. My husbands next concern is if they make him pay more each month will they also change the amount he will need to pay for the life of the IVA. His total debts amount to 18k but the IVA contract says 100 per month to pay off 6k and rest will wash off.
Sara (Debt Camel) says
It is rare for anything to be taken in bankruptcy except a house with equity or a car worth over a couple of thousand. Normal household goods are ignored – which is all the things you have mentioned unless they are unusually expensive eg a pretty new large American-style double fridge-freezer. You don’t have to list anything on your bankruptcy application unless its second-hand value is more than £500.
As his debts were under 20k, it is possible he may qualify for a Debt Relief Order rather than bankruptcy. But see what his IVA firm comes back and says…
may says
Ok great thanks for the advice. Really appreciate it.
Mary says
I’m have been with my partner since the first week of February 2020. Before we become partners I was like him getting about £50.00 a week and he is in the same place as he is out of pocket like me for £50 a week so we are now £200 less well off due to the change of circumstances. I’m really struggling and I’m severely disabled depending on family, friends, and careers I’m bed bound and extremely depressed as I Sam under 5 hospitals. I am also one of my doctors most complex patients out of 10,000 patients he has me on his most 50 patients in. His financial situation has nothing to mine except I’m outta of pocket. I am struggling most weeks to get by hand to mouth as I have all my household bills to pay food to buy and a car I am never well enough to get out and about.
It’s 9 years next year since I have seen my elderly parents and I am broken hearted over this. It was probably never possible because of the COVID-19.
Sara (Debt Camel) says
Hi Mary,
Some questions…
is if worth having a car you hardly ever use?
are you getting PIP? What rate?
Do you have debts?
Why are you worse Off living with a partner, most people gain from sharing the household bills?
Mary Murphy says
Evening,
I need to correct what I said about £50 he is out of £50 every week and I am out of £50 every week so that’s £200 every two weeks.
Kara says
Hi can i ask , i have debts of £8930 and looking to do a DRO – i’m in rented and i’m not unemployed as full time carer for my dad and my son has just been diagnosed with autism – i have put in a claim for DLA for my son with help from Barnardo’s don’t know if this will affect my current univsersal credit claim and also will i still be able to do a DRO if the claim goes through as i will then have more than £50 left over each month. I am really worried as need stress of debts gone but feel money for my son shouldn’t be used for debts i can no longer pay that were a result from domestic violence?
Weatherman says
Hi Kara
When working out your disposable income for a DRO, any money for disability payments is immediately cancelled out by spending (in this case it might go in the ‘childcare costs’, for example).
Because you mentioned domestic violence, if you’re concerned about your address being published as part of the DRO process, you should ask Barnado’s about a Person at Risk of Violence (PARV) order if you haven’t already. Your DRO application would be paused while you get this, but once you do it would mean that your address wouldn’t be made public.
Sara (Debt Camel) says
Do tell your DRO adviser all about the DLA application.
Your UC may increase, see the “Child Element” section https://www.turn2us.org.uk/Benefit-guides/Universal-Credit/Additional-Elements-of-Universal-Credit. But this won’t mean you have too much disposable income for a DRO. As Weatherman says, you can add in extra costs for the disability.
You may get a lump sum from DLA backdating when it comes through (by the way if the DLA application is rejected ask Barnardos or your local Citizens Advice for help to appeal this!). You must discusss this with the person setting up your DRO but it will probably not be a problem.
Andy Osborne says
Hi, I took out an IVA as advised in June 2019 with debts just over £14k. Thing is, I was never advised by the company about the option of a DRO so signed up and payed £75pcm for the first year which was due to become £50pcm for the following four years.
Started work at Citizens Advice in October 2019 aware that this would affect my payment, on chatting to colleagues and showing them my plan, they were astonished to see that the DRO was never discussed, particularly since at the time, my monthly PIP award of £255 was used for income but nothing included for adult care costs in expenditure, leaving me with a monthly surplus of £55.
When I have previously questioned this with the provider, they explained that the PIP was included as income so as to give me a surplus thus making me eligible for an IVA…. At last years review I made a lump sum payment to cover the increase in income due to my employment and my monthly payment was increased to £173pcm. When I questioned the use of PIP as income without any care costs in the expenditure, I received notice that I had overpaid, I had 2 free months and then payments were reduced back to £50pcm.
I’ve continued with these payments and now my annual review is due. My colleagues at CAB are suggesting I complain about the way in which I was sold the IVA and insist that they would have referred me straight to the DRO unit as the obvious option.
Any thoughts…???
Sara (Debt Camel) says
It is a shame your colleagues didn’t suggest you let the IVA fail in October 2019, then you could have had a DRO back then. Or that you did not query the IVA then.
Who is the IVA firm? You can certainly complain about the IVA being mis-sold as it was not explained to you that a DRO was an option. But what redress should you be asking for? You could ask for the IVA to be closed on the basis of the funds paid to date… that would be unusual so early in an IVA but you can argue it is justified because of the IVA mis-selling. I haven’t seen a case like this won but these complaints are only just starting so it is possible it could be.
Have you had debt advice saying that you would now qualify for a DRO? If you do, then you can simply let the IVA fail now and have a DRO. That would save all the future IVA payments. Also if you have acquired any more debts (utility bill arrears say?) they could go into the DRO. The only downside is (assuming you do qualify for a DRO obviously) is that the DRO marker would be on your credit record for another 6 years, whereas the IVA marker only has another 4 years to go.
Andy says
Thanks for the reply… so, I was volunteering at CAB when I took out the IVA with PayPlan. 4 months later a P/T job came up doing exactly what I was already doing so went for it. Still doing the same job now and income would be way over limit for DRO now.
Thing is, would I have taken a P/T job if I’d been in a DRO rather than an IVA. Well no, is the answer, I’d have ridden that out for a year then maybe taken up work again at a later date. So as my colleagues say to me I’m now paying for something I really wouldn’t have been had I been given the correct advice…???
Andy says
Even my initial advice letter has absolutely no mention of a DRO
Michelle T says
Have a question in relation to IVA but not in line with current topic so hope someone can advise. Its not for me but a sibling. This is a tad difficult for me – She’s dying currently in vegetated state before she became unconscious she was worried her husband wdnt be able to find the answers he needed. They currently have an joint IVA 3 1/2yrs into it they like many other are using siblings pip & esa to meet the payments on advice – when she dies what happens next. Her estate is currently in debt so iva I believe wd be cancelled & closed – now the problem – sometime in the next 18 mths she is due to receive an inheritance if her estate is finalised before the inheritance is pd does the iva restart
Sara (Debt Camel) says
Very sorry to hear this difficult situation.
Are you saying someone has died, leaving her dome money but it hasn’t yet been distributed?
Does she own a house with her husband or are they renting?
Michelle T says
Yes dad died in April. No they rent
Sara (Debt Camel) says
Is there a reason they did not go bankrupt rather than an IVA? How large debts does her husband have? And how large are her debts?
Are you saying they can only pay the OVA with help from other relatives?
I’m sorry to have to ask this, but is it likely she will die soon? Or may stay in this state for years?
Michelle T says
From what sister said IVA was the only suggestion advised in my opinion a DRO would have been a better option but they were never told about it. Debts were approx 12k before IVA started & work circumstances for husband decreased shortly after. They continued to make the pmts using her PIP & didn’t notify the IVA agents of changes to reduce or change the debt repayment method. If she died tomorrow they have no money to pay off debts & her own debts wd normally die with her. As I said the problem is timing – her estate wd be processed through probate before inheritance from dad wd be available. They dont want to fall foul of deprivation of assets for DWP (a seperate issue) nor to have to worry about debt being reopened if/when receive inheritance and they hadnt prepared for it.
As to her condition they removed all support 2 days ago so sadly it’s just a matter of time how long is down to her determination this all seems presumptuous but I cant help them physically so im trying to find practical things to help them with & this is one of two things she was worried about.
Sara (Debt Camel) says
Deprivation of assets – how large is the inheritance likely to be?
The problem here is that it doesn’t matter how long it takes for the estate to be distributed, it is the date of death that matters, and that was when her IVA was running so it will be a windfall for the IVA.
Michelle T says
Depending on whether another sibling attempts financial provision 45k+ this wd be split between husband 2 children. So husband needs to inform iva that inheritance is due however long it takes & once in receipt pay over the amount outstanding on both debts & wd he be required to continue paying iva monthly amount?
Sara (Debt Camel) says
He may think he has a “joint” IVA, but actually legally there are two separate IVAs. Her inheritance will have to settle her IVA. But if she dies and the rest of her money is left to her husband, that would have to be used to settled his IVA. Had she made a will?
Settling an IVA jnvolves paying the debts in full, plus the IVA firms fees. Plus sometimes 8% a year interest added to the debts, it depends how the IVAs were written.
Who is the IVA firm?
Michelle T says
Ouch not sure. Is an iva classed as an immediate debt then.
Thank you for this it’s been very helpful
Sara (Debt Camel) says
You are worrying about the DWP and deprivation of capital? I don’t think that is normally a problem, the executor of the will will normally send the money directly to the IVA firm.
I am assuming here that the will she is inheriting under doesn’t have an insolvency clause, which means the money won’t go to her at all.
I think the husband needs some help with all this. I suggest he contacts his local Citizens Advice.
Michelle T says
Deprivation comes in bc she’s 42 with no will so a deed of variation wd be needed to pass money on to her children – A good lesson for us all we never know what’s round the corner.
Just 1 further thought shd she survive – sadly unlikely – the date of iva completion & all pmts made upto date & inheritance still not paid out what then?
Once again thank you for your help.
Sara (Debt Camel) says
Whoever is looking after her affairs at the moment needs to tell the IVA firm about the inheritance. Now, not when it is paid out.