If you receive PPI Compensation during your IVA it is treated as a windfall. As such it will have to be paid into the Arrangement.
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- Do you have to claim for PPI during your IVA?
- What happens to any Compensation paid?
- Can you claim against debts not included in your IVA?
- Can you make claims after the Arrangement?
The deadline for claiming for PPI was 29th August 2019. If you did not make your claims before that date you are no longer eligible. No new PPI claims can now be submitted.
Do you have to claim for PPI Compensation during your IVA?
Your IVA Company will usually ask you to claim for PPI compensation during the Arrangement. They are obliged to maximise the amount you pay back to your creditors and claiming for PPI is a good way of doing this.
You cannot refuse the request. You must cooperate with any reasonable demands that your Insolvency Practitioner (IP) makes. If you do not it could be grounds for them to fail the Arrangement.
The claims will usually be made by a third party claims management company working on behalf of your IP. This organisation will undertake all the work. You will not have to do anything except give your authorisation.
What happens to PPI Compensation paid during an IVA?
Any PPI compensation paid to you during your IVA is considered a windfall. As such it must be paid into the Arrangement for the benefit of your creditors.
Unless the payment is very large in comparison to your original debt the length of the Agreement will not reduce. You will still have to keep up your normal monthly payments. The amount repaid to your creditors simply increases overall.
In most cases the bank in question will pay the cash directly to your IVA company. If you receive it personally for any reason you cannot keep it. It must be forwarded on to them.
PPI Compensation normally includes a certain amount of interest. Most IVA Companies will let you keep this element of the claim as an incentive for co-operating with them.
Can you claim for PPI against debts not included in your IVA?
You may have had loans or other debts which you paid off before starting your IVA. In addition you could have existing accounts which are not included such as your mortgage or a secured loan or HP agreement.
If you claim against these accounts you might think you will be able to keep any PPI compensation you receive. Unfortunately this is not the case.
Even though these debts are not included in the Arrangement any compensation paid to you in relation to them is still a windfall. As such you will have to tell your IP and hand it over.
Do not try to hide PPI compensation you receive during your IVA. Your IP will usually become aware of the payment during your next annual review. They will then demand that you hand it over at that time.
What if you make PPI Claims after your IVA has finished?
You might consider delaying your PPI compensation claims until after your IVA is completed. This would seem sensible as generally speaking you can keep any windfalls received after your completion certificate has been issued.
With most type of windfall this is the case. If you receive a lottery win, bonus from work or an inheritance after the Arrangement has ended this money is yours to keep.
However PPI compensation is not treated in the same way. In March 2017 the Court of Appeal ruled in a case known as Green v Wright that in most cases this type of windfall is still payable into an IVA even after it is completed.
The Green v Wright ruling does not apply in all circumstances. It may still be possible for you to make PPI claims after an IVA and keep the money. However you must first get written confirmation from your old IVA Company that they have no further interest in any compensation payable.