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What happens to disability benefits if you go bankrupt

What happens to disability benefits if you go bankrupt

What happens to disability benefits if you go bankrupt

Your disability benefits such as PIP and DLA will not be affected if you go bankrupt. You will continue to receive the payments as normal. The funds will not be taken from you.

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Do you lose your disability benefits if you go bankrupt?

If you go bankrupt, you will continue to be paid any PIP (Personal Independence Payment) and DLA (Disabled Living Allowance) as normal.

The benefits agency responsible for paying you will not be told you have gone bankrupt. Even if they do become aware, it is not an issue for them.

The fact you have gone bankrupt has absolutely zero affect on your disability benefit claim (or any other benefits you receive). Your eligability to receive the payments remains the same.

You will still be able to have a basic bank account in your own name to receive your payments. That said, you might have to open a new account if you owe your bank money or your account is not already a basic one.

You still have to pay the full bankruptcy application fee if you receive disability benefits. There is no discount regardless of your financial circumstances.

Struggling to get your head round all of this? We can help. Call us (0800 077 6180) or complete the form below. The advice is free and confidential.

Will you have to make payments towards your debts?

After you have gone bankrupt, you don’t have to worry about losing any of your ongoing disability benefits money. None of your PIP or DLA money can be taken from you to pay your debts.

If your only income is from benefits payments, you will not have to make any further payments towards your debts at all.

You may be living with a partner who is working and their income is supporting your living expenses. Even in these circumstances, you don’t need to worry. Their income can’t be used to pay your debt.

Your partner’s income will not touched and you will still be left with no ongoing payments.

When you apply, you will still have to list your PIP or DLA income on your application form. However, you don’t have to justify how you spend the funds. You can simply include an equivalent amount in your living expenses budget under “disability expenditure”.

A major benefit of going bankrupt for people on disability is that non of your benefits can be taken from you. You are unlikely to have to make any more payments towards your debt.

Can you keep a recently received benefits back payment?

If you have recently started getting PIP or DLA, you might have also received a cash lump sum back payment.

Under normal circumstances, any cash lump sum you have in your bank account at the time you go bankrupt will be taken from you. However, if these funds come from a disability benefit payment, they are exempt.

Basically, any cash you have saved in your account which are from a benefits payment remain yours to keep. In other words they are protected.

The question might be how you would prove where the funds have come from. However, a recent benefit back payment should be easy to identify on your bank statement. If not but you have no other form of income, it will not matter.

Need advice about going bankrupt? Give us a call (0800 077 6180) or complete the form below. Its free and confidential.

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