On Income Related ESA, parents want to pay off credit card debt

[Slatted]

A friend has a credit card balance of around £3000 and his parents have offered to clear this for him but are worried that such a large payment to him will have implications on his benefit.

 

The card account is managed online and no paper statement is available so they may have to pay a cheque into his account.

 

He is on Income Based ESA and has no savings.

[id6052]

should not be a problem

[antone]

should not be a problem

 

Agreed, should be fine. I advise that your friend keeps a paper trail to show what's happening in case anyone asks about the £3000 payment to his account, but this sort of thing is fine under ESA(IR) rules.

[SabreSheep]

Parents could make payment direct to the credit card so the money never touches the friends bank but as always keep receipts etc

 

Make sure it goes to the correct account number etc

[dx100uk]

I'd be reclaiming first

 

dx

[Slatted]

Reclaiming what?

[dx100uk]

PPI or penalty charges [fixed £12 fee late/letter/over limit]

[Slatted]

There is no PPI issue.

 

Does anyone know the place in Rules that allows this payment? I think his parents are going to need proof.

[SabreSheep]

There is no PPI issue.

 

Does anyone know the place in Rules that allows this payment? I think his parents are going to need proof.

 

no rules apply. He should have a sort code. Account And Reference number for the oc.

 

all parents do is pay to the correct account and sort number and use correct payment reference.

 

make sure they keep receipt.

 

If its paying account off full then the debt owner is not going to care how they get their money.

 

Remember the payment reference is vital as it ties the payment to the debt.

 

this way the money never touches his finances directly and therefore common reason stands that it is therefore not income

 

this does not stop him from claiming back unlawful penalty charges later on

[antone]

There is no PPI issue.

 

Does anyone know the place in Rules that allows this payment? I think his parents are going to need proof.

 

There isn't a rule that specifically says "it's OK for your parents to pay off your credit card bill", but a one-off gift to him of £3000 would be treated as capital rather than income. As such, it wouldn't affect his benefit since it is less than the £6000 threshold.

[citizenB]

Pay it directly to the card account - take the statement to the bank and pay it over the counter ! That way the money doesnt hit your friend's bank account.

[SabreSheep]

Pay it directly to the card account - take the statement to the bank and pay it over the counter ! That way the money doesnt hit your friend's bank account.

 

Thats what I was saying

[Slatted]

The statement is online and has "copy, for information only" on anything that would be printed out so they will have to have his card details and ring or give him the money.

 

I need to know what to tell him to show his parents as confirmation that they can pay the lump sum without effecting his benefits and also a way to indicate that regular payments from them would be seen as income and effect the benefits.

[SabreSheep]

If the money never touches his hands or bank account and goes directly from his parents to the creditor then it is not income....