What happens if I win the lottery while I’m in debt?

posted by in Living with debt

Check those numbers

A way out for those in debt? Probably not…

Friday’s EuroMillions draw is for a cool £23 million. Only last week a couple from Cambridgeshire won £101 million. But what happens to you if you win the lottery while you’re in a debt solution?

It’s a tongue-in-cheek comment we hear numerous times a day when we’re sorting out a client’s budget and ask if they’re due to come into money in the next 12 months.

We don’t encourage gambling of any kind. The chances of winning the lottery are pretty astronomical and the odds are only increased slightly by actually buying a ticket. But we can’t stop people throwing their pounds away!

So what would happen if you were on an informal or formal debt plan and you won big? Time to check those numbers…

DMP lottery winner!

If you’re a in a debt management plan (DMP) and you win the lotto we hope you win big. As a debt management plan is an informal agreement with your creditors you would be expected to repay all the debt in full. OK, we’re sure you wouldn’t be bothered with that piece of information if you won a couple of million!

However if you only won a couple of thousand pounds it would be expected that you pay some of this into the plan. Keep your fingers crossed for a rollover…

DRO lotto result!

We know you’re a debtor, but things just got a lot better! If you were on a debt relief order, weren’t discharged yet but won big on the magic numbers you would immediately be no longer eligible for the order.

You’d be expected to repay your debts in full. Again you probably wouldn’t be too bothered if you won the ‘big one’ but if you just won enough to clear your debts you’d be expected to do so straight away.

IVA big jackpot winner!

An individual voluntary arrangement (IVA) is a legally binding, formal solution. If you went from insolvent to in the money while you were subject to an IVA you would be expected to repay your debts in full, and your creditors would be allowed to charge interest on the debts.

You would also be expected to pay the fees incurred in the IVA.

Bankrupt to multi-millionaire!

It’s a bit more complicated if you’re in the midst of personal bankruptcy.

If you were an undischarged bankrupt you might think twice before playing your favourite numbers. You would be expected to pay your debts in full, plus interest, plus the charges associated with the official receiver and the Insolvency Service. All these charges would need to be justified but in many cases this could make it quite costly win.

If you were a discharged bankrupt you’d be fine to play the lotto as the official receiver cannot take any lump sum you receive. However, if you invest the money and it generates income they can vary the income payment order. This might mean that you end up with the interest your millions are earning are paid into the bankruptcy until the payment order ends (usually three years).

Lotto no no

Despite our killjoy attitude to the lotto, let’s finish with a happy story: we once came across a client who got very lucky…

The client was in problem debt and looking at a formal solution, but one day our counselling team received a call after the client won a six figure sum at the local bingo. It was more than enough to clear her debt and start a new life.

She was very lucky but remember, virtually all others aren’t, and the lottery isn’t a way out of debt. If you’re in debt and hoping your numbers come up soon to help you get out of trouble you’d be better advised to try our online counselling service Debt Remedy.

We can’t promise to make you rich but we can help put an accurate budget together and find a solution to your debt problems that might make life a little more comfortable.

*If the lottery is only the start of your gambling issues and you think a little flutter is becoming more of a problem you should contact Gamcare for help and advice.

Matthew worked as an IVA drafter prior to working in social media. In a former life he wrote scripts for Eastenders, Emmerdale and Hollyoaks. He has 3 chickens, 2 dogs and a rabbit.

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