PPi refund going to current account with overdraft with Payplan

KarmannBoy1980

Hi, I have been offered £1349 from Lloyds for a PPi refund, however they insist on paying this to my old Lloyds current account, I am going through a debtplan with Payplan and the £1000 overdraft on the current account is included, So my question is can Lloyds effectivley swallow the £1000 and only let me have the £349? I am paying an amount each month to clear everything with Lloyds of which they have excepted (quite a generous amount so they said yes straight away).

I have a feeling that when my £1349 eventually gets paid in they say heres the £349 sir, you cannot get to the other £1000.

Hope thats clear guys! Anyone else in this position?

The_Swerve

Hi,
I would have thought they are well within their rights to do that, you do, afterall, owe them the money.

Its probably why very few (if any) reclaims companies will deal with people in debt management already.

Miss_Marple_2

I'm not sure what would happen in this case, as Lloyds are good at offsetting & grabbing money that isn't theirs, but maybe what you could try is saying that Payplan, under the terms of the DMP, would not accept preferential treatment of one creditor over another and would not permit the repayment to be used in this way. Of course, that would mean that you would need to use it to repay your creditors, but in a fairer way than Lloyds taking it all.

eyeopener2

Thing is, you can look at it this way. You will be debt free quicker.

The payment you are making to Lloyds is then split between your other debts in your DMP so they will be cleared quicker.

You can use the balance to pay towards one of your other debts.

You will be £1349 pounds nearer being debt free and surely thats a good thing?

This is a nice gift (wish I had it) so use it sensibly to get out of debt sooner.

magpiecottage

Miss_Marple wrote: »

I'm not sure what would happen in this case, as Lloyds are good at offsetting & grabbing money that isn't theirs

but the money they withhold IS theirs.

maybe what you could try is saying that Payplan, under the terms of the DMP, would not accept preferential treatment of one creditor over another and would not permit the repayment to be used in this way.

That would be the case if the money was in the OP's hands. However, as things stand, he owes money to the bank and is in default on the repayments.

Therefore the bank can set off any money it owes him (i.e. the redress) and only forward what is left over. This is a long standing principle.

Miss_Marple_2

magpiecottage wrote: »

but the money they withhold IS theirs.


That would be the case if the money was in the OP's hands. However, as things stand, he owes money to the bank and is in default on the repayments.

Therefore the bank can set off any money it owes him (i.e. the redress) and only forward what is left over. This is a long standing principle.

I understand what you are saying ( my comment regarding taking money that isn't theirs was more related to a situation that happpened to me where they grabbed something they should not have done - I am still bitter about that £18.89 3 years later ) but I thought they would only offset your redress if they were in arrears on the thing your redress is related to (loan or CC). If the OD is not what the redress is for and is not in arrears - can they really just use it to pay the OD off in full ?

KarmannBoy1980

Just to confirm, the O/D is approx £1000 so I could take the balance of £350 and clear the O/D and close the Lloyds current account, but as stated above other creditors get very funny if you pay any lump to one creditor and not another, given the circumstances if Lloyds hold the £1000 then its out of my control, I will just have to ask for the balance of £350 and walk away, atleast its one more debt cleared, just wondered if anyone else had this situation etc etc..

Anyway my letter is dated 22 Sept so I wont have to worry about this for quite some weeks, after hearing how long people are waiting for their payments!!