Repay family loan without 'deprivation of capital'

I borrowed 65k from my sister in 2006/7. The loan was not documented. I have only been able to repay 3k. I would like to cash in part of my pension to repay her the 62k balance without falling foul of the deprivation of capital rule. I would like to ask the DWP and my Housing Benefit department to approve the repayment before I cash in the pension.

My pension has been available for cashing in since I reached the age of 55. I am now 57. It's a registered, HMRC approved pension. I haven't taken any cash from it yet. The cash value is 277k.

The loan from my sister consisted of one big payment to me and a series of payments to my mortgage lender. (She paid my mortgage for a year.) These payments are shown on her bank statements.

I repaid 3k to my sister last week. I funded this by selling my possessions. I haven't told the DWP about this. The only evidence that I haven't repaid the other 62k is the absence of payments from me to her on our bank statements since 2007.

I also have evidence that I had 2 properties repossessed in 2008/9 and defaulted on 6 credit cards. So I hope that would support my claim that I lost my sister's money and was unable to repay her.

Since 2012 my only income has been benefits: housing benefit, ESA, DLA and PIP.

(There's also the question of my other creditors having preference over my sister. I'm still assessing this. 5 of the credit card debts are statute-barred and 1 is enforceable because of a CCJ. There may also be an enforceable mortgage debt. I'm trying to find out about it.)