Capital loaned to brother but not being repaid

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    The scenario of this case is that the claimant inherited around £40,000 over two years ago and lent her brother £20,000.

    She has recently claimed benefit again as her capital is lower than £16,000. She has stated the amount of £20,000 loaned to her brother has not been repaid and that he is not in a position to repay it. In effect she appears to have written this off.

    I know under Reg 41(1) that if capital owed brings the total amount to over £16,000 then the amount owed is not treated as capital but the repayments treated as income. However, in this situation the money owed is not being repaid and is unlikely ever to be repaid.

    At present the £20,000 has been included as capital. An appeal has been received. I don’t consider this to be deprivation of capital, but nevertheless should it be included as capital if no agreement is in place to repay it?

    Chris Robbins

    Well, she has disposed of the capital. As she no longer has it I do not see how you can include it.
    For me this is not a Reg 41(1) situation as no agreement to rep[ay by installments was ever entered into.
    I think it is simply a question of whether or not you consider this was deprivation.


    Could the right to seek repayment have a value? I.e. could she sell the debt to a loan shark? I think this is called a ‘chose in action’ – see CJSA/0204/2002 for info.

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