If you get PPI compensation are you legally bound to use it to pay off debt?

wowwow

Hypothetical question, if my PPI claim is successfull am I legally bound to use it to pay off the debt I still have with that particular company?

Yes it would make sense to do so, but I just wondered if it was a legal requirement.

Thanks

[Deleted User]

wowwow wrote: »

Hypothetical question, if my PPI claim is successfull am I legally bound to use it to pay off the debt I still have with that particular company?

If you are in arrears or have defaulted on the debt then the Bank can legally offset any redress awarded towards the debt. You simply won't see any money unless the amount offered exceeds that which is owed.

If, however, you have no arrears and have kept to the schedule of the loan agreement then there is no legal requirement for you to pay off the debt.

wowwow

I still owe them some money but pay back an agreed small amount each month via the CCCS. If I get sent a cheque am u legally obliged to use the money to pay off the debt owing?

Thanks

[Deleted User]

wowwow wrote: »

If I get sent a cheque

As I said in my earlier reply, you won't get any cheque unless any redress they award exceeds the amount you have failed to pay.
Put bluntly, the Bank can and will subtract the amount you owe from any compensation you may win.

wowwow

Well they sent me a cheque and I still owe some money, so you are not correct.

Can anyone else answer my original question, now I have the cheque do I legally have to use the money to pay off the loan?

[Deleted User]

wowwow wrote: »

Well they sent me a cheque and I still owe some money, so you are not correct.

Didn't this start off as a hypothetical question? Funny how you now actually have a cheque.
I've already answered that the Bank can (and usually) will offset any outstanding loan amounts which have defaulted or are in arrears.
If they haven't, then it's up to you what you do with the money.

wowwow_on_18/06/12 wrote: »

So now the PPI company claim that we owe them comission on all of the loans not just the original three we asked them to look into. We duspute this but they have said they can as it was in the 'small print' evidence of which I have asked for 2 weeks ago but not seen.
We only asked them to look at three loans, not anything else, which they are now claiming we owe them comission on everything.

Hypothetically speaking, you could use your "cheque" to pay off the Claims Company you also owe money to!:p

wowwow

Thanks, but the question is still not answered. Do I legally have to use the money supplied to pay off arrears.

I don't want should/would/could etc etc. If you don't legallyknow, don't answer.

Less blunt now hey!:D

"Hypothetically speaking, you could use your "cheque" to pay off the Claims Company you also owe money to!:p" - Hypothetically done already.:T

sulkisu

No you do not. Once they send you a cheque, the money is yours to use as you wish. As another poster has stated, the bank could have offset the amount paid out against the outstanding debt. If they have sent you a cheque, it was probably a mistake - i.e. on department not knowing what the other was doing. They may well realise their mistake, in which case prepare for the possibility that you DMP arrangement with them goes up in smoke. I would expect their logic to be 'why should we continue to freeze interest payments and accept £x a month, when we know he received a cheque for £x and could easily clear his debt..

ETA- Depending on the sum involved, this might affect your position with the CCCS. As they are handling your affairs in relation to your debt with this company, they may well inform the CCCS of their payout to you (which you are expected to do anyway). It should then be factored into your available budget. If you choose not to do that, especially if it is sufficient to clear your debts, the CCCS may decide not to represent you futher. Ultimately you could well end up worse off.

burty8899

i could tell you it is, i have no idea but what i say here isn't legal, if you want a 'legal' answer then i suggest you see citizens advice. that way you can be sure.

if you spent all of the money, then the company comes back and says we want it back would you just say somebody on a forum somewhere said it was legal for you to spend it?

that said , as the cheque came to you i would have thought the money is yours to do what you want with.....

dunstonh

You have no legal requirement to use the money in your hands against your arrears/defaults unless you are bankrupt (current or discharged).

The lender can use the money to pay against defaults, arrears or amounts written off if they choose to do so (some caveats apply). So, if they refuse to pay you because you are in arrears, that is allowed. However, they get to choose.