PPI Claims after bankruptcy

debtinfo

Ok then PPI, (that is payment protection insurance) and bankruptcy, or more specifically reclaiming PPI and bankruptcy. Please note this is not about if you are eligible (in terms of if you have been miss-sold) as that is not my area and there is plenty of advice on that elsewhere, probably elsewhere on this site in fact. So for the purpose of this lets just assume that you have been miss-sold and that there is a potential to make a claim against a bank.

It has been asked many times recently if you can reclaim the PPI on credit agreements if you have been made bankrupt, and more importantly for some people, whether you can keep any pay out.
The first thing to understand is why a claim can be made in the first place. If it has been miss-sold to you then there has been damage caused to you estate (your finances) and so you had a right to take action in court to seek recompense. This is called a right of action. Next to look at is when this right came into being. It comes into being when you signed that contract where the miss-selling was done, from that point onwards the right or action (ROA) comes into being.

Next is to see how that ROA interacts with bankruptcy, when you go bankrupt it is the default position that all of your assets transfer to the trustee of your bankruptcy unless there is a specific provision otherwise (for instance there is a specific position that you get to keep all your basic living goods). Now in the definition of what is an asset in bankruptcy it includes “Things in action”. An ROA is a “Thing in action” and therefore is an asset.

So to summarise the ROA is an Asset and that asset is created when you signed the credit agreement. Being that in these instances the PPI claims we are talking about are all on credit agreements signed before the bankruptcy then these PPI claims are all assets and they all vest with the trustee of your bankruptcy.
This means that not only do you not have the right to receive the monies from any claim but that you also do not have the right to make the claim, That right passed to the trustee and so it is the trustees right whether to take it forward or not, the claim now belongs to them.

As far as I last heard the Insolvency service is trialling using a solicitors firm to take batches of these claims forward en masse to the banks and therefore if you have already made the claim and pocketed the cash there is a good chance that the IS will at some point try and cash in the claim and therefore realise that you already have. At that point they will have the option of recovering it from you.

fermi

Insolvency Service/Official Receiver info - Payment protection insurance mis-selling claims and bankruptcy

Payment protection insurance (PPI) mis-selling claims and bankruptcy
PPI mis-selling guidelines

Following the recent publication by the Financial Services Authority of proposed guidelines for firms that sold PPI policies and their contact with customers who may have been mis-sold a policy, but have yet to complain, the following information may be useful to persons who became bankrupt after the sale of a PPI policy.

A PPI mis-selling claim: a bankruptcy asset

Following provisions of the Insolvency Act 1986, The Insolvency Service takes the view that if a PPI policy was mis-sold before the date of an individual’s bankruptcy, any claim relating to the alleged mis-selling of the policy is owned by the official receiver or trustee of the bankruptcy estate, not the individual to whom the policy was sold.

Discharge from bankruptcy does not alter the position

Discharge from bankruptcy does not alter this position. Discharge does not operate to transfer unrealised assets, including PPI mis-selling claims, back to the individual.

Considering a PPI mis-selling claim: refer to the official receiver or trustee

If a (former) bankrupt considers that a PPI policy was mis-sold, they should not attempt to pursue a mis-selling claim without reference to the official receiver or trustee.

If a claim has already been made, the official receiver or trustee should be informed of the claim and the person against whom the claim is being made should be informed of the bankruptcy

Use of claims management companies

The Insolvency Service is aware that some (former) bankrupts have used claims management companies to pursue PPI mis-selling claims for them. If these services are used after the date of the bankruptcy order, it is possible that the individual will remain responsible for all or part of the commission charged if an award is paid to the official receiver or trustee. This may be because the amount of the commission is challenged by the trustee or if the firm against which the award is made is a creditor in the bankruptcy and exercises a right to set-off the award against its claim in the bankruptcy. This could result in no payment being made from which the commission could be paid.
As such, care should be taken before acting in this way.

Best course of action: contact the official receiver or trustee

The best course of action for any individual contemplating making a PPI mis-selling claim who is or has been affected by bankruptcy is to contact the official receiver or trustee dealing with their case before proceeding further.

fermi

IMPORTANT: IF YOU ARE APPROACHED BY A COMPANY THAT TELLS YOU THAT YOU CAN CLAIM AND KEEP REFUNDS ONCE YOU ARE DISCHARGED, THIS IS A LIE.

Please report any such companies to the Ministry of Justice and the Insolvency Service, and send them copies of any paperwork making these false claims

THIS applies even if the account/policy was paid off before your bankruptcy.

Thanks for that debtinfo.

Whether or not people get the all the technical nuances of the rest, I think this part is the crucial thing people need to understand.

debtinfo wrote: »

This means that not only do you not have the right to receive the monies from any claim but that you also do not have the right to make the claim, That right passed to the trustee and so it is the trustees right whether to take it forward or not, the claim now belongs to them.

As far as I last heard the Insolvency service is trialling using a solicitors firm to take batches of these claims forward en masse to the banks and therefore if you have already made the claim and pocketed the cash there is a good chance that the IS will at some point try and cash in the claim and therefore realise that you already have. At that point they will have the option of recovering it from you.

dojoman

Great post DI, thank you, much appreciated:)

debtinfo

ps if anyone wants to ask a question re the finer points then feel free to do so, the above is really just a sketchy outline.

virtuous

Dear Debtinfo,

I was discharged from bankruptch on the March 10th, 2005, my credit report when I checked in 2008 indicated that it was discharged. I was also told that after 3 years of discharge, then one should be free from that negative message on ones credit report. I claimed PPI from two loans from Halifax and have just told me that they will forward the money to Official Receiver. The thing is, it was Halifax who sold my house and was made bankrupt because of it, so it is so rich of them to say that they will now forward all the monies to the official receiver, any advise on what I should do next. I have used my time and money chasing the bank for this only to be told that they will forward the money to the official receiver, I am really gutted to be honest.

debtinfo

As is explained above the money is due to the or so there us not really anything further to do

mel12

Hi Virtuous,
Unfortunately the bank is right to pay the money to the official reciever and you won't be allowed to keep it.

debtinfo wrote: »

The first thing to understand is why a claim can be made in the first place. If it has been miss-sold to you then there has been damage caused to you estate (your finances) and so you had a right to take action in court to seek recompense. This is called a right of action. Next to look at is when this right came into being. It comes into being when you signed that contract where the miss-selling was done, from that point onwards the right or action (ROA) comes into being.

Next is to see how that ROA interacts with bankruptcy, when you go bankrupt it is the default position that all of your assets transfer to the trustee of your bankruptcy unless there is a specific provision otherwise (for instance there is a specific position that you get to keep all your basic living goods). Now in the definition of what is an asset in bankruptcy it includes “Things in action”. An ROA is a “Thing in action” and therefore is an asset.

So to summarise the ROA is an Asset and that asset is created when you signed the credit agreement. Being that in these instances the PPI claims we are talking about are all on credit agreements signed before the bankruptcy then these PPI claims are all assets and they all vest with the trustee of your bankruptcy.

jobsworth123

i went bankrupt apr 07 left 12 months later, all went well

i started to do the PPI thing from the same bank i owed money too told my claim experts gladstone brookes and they said ok not a problem ,

6 months down the line i accepted a offer of a little over £1000.00
i thought it was more from letters i found and i was paying £75 a month PPI i added it up to about £4300

so i got cheque other day and it was named to THE OFFICIAL RECEIVER
which made me mad as what i read after is that they said we are keeping the other £3644.00

i thought that when your out of your 12 month bankrupt order its over
as i asked my receiver if i won lottery ( wish and still waiting ) in the order id have to pay , after ther 12 months even 1 day after no more money to be paid its over

so heres my question IS THIS LEGAL for them to do this and the bank got in touch with receiver and bank or receiver never got in touch with anyone me or GB

hope someone can help me

kindest regards mick

tigerfeet2006

Yes, perfectly legal. Read Debt Info' posts at the beginning of the thread and find out why. PPI is not the same as winning the lottery after discharge.

debtinfo

answered via PM