IVA & PPI claim - dont bother.

Options
Hello,
I took an IVA in August 2008 so i'm nearing the end at last. I am looking for some advice,basically my IVA company suggested i should claim PPI on my debts,they had a division that specialised in getting PPI for people in an IVA,apparantly. So i agreed for them too go ahead,this was back in May 2012.

I never heard anything back,until Sept this year when LLoyds sent me a letter with a final offer, which the majority of my debt was with them and i knew i had PPI with them over the years of financial history,but because of my IVA didnt think there was any chance of getting any back.

So the final offer was £16k!! i was stunned to say the least! My initial IVA debt was £28K,with which ive been paying £349 per month. I phoned up my IVA practitioner and told them about the letter they told me the money would be used to pay off my IVA then after fee's i'd have the rest in my bank,great,i thought,just the ending of my IVA would be the best thing to be honest!

Up untill this week i still hadnt heard anything,so i contacted my IVA practitioner again and asked if they knew what was going on,excitedly waiting for the end of my IVA. I spoke to a different person who informed me i wouldnt "see" any of the money,the IVA wouldnt be finished and my payments wouldnt even lower. The person didnt have the authority to tell me anything different. Devastated! The money would go toward my debt and make no difference to my IVA. Surely this cant be right,i wish i hadnt bothered letting them look into the IVA the only winner here is the company getting their fee (33%)

I'm just looking to see if anyone else has had this happen to them,thanks.
«1

Comments

  • milliemonster
    Options
    Was your original level of debt £28k or what was agreed to be repaid on the IVA £28k?, £349 a month over 60 months is £20940, adding on the £16k to that would be around £36k which would seem about right.

    The problem is you always owe the full amount of debt until you repay in full or get to the end and the rest is written off, plus fees, it looks like you will be repaying probably 100p in the £1, I know it probably seems unfair but what you have to remember is that interest was frozen at the start of your IVA so you will have saved an awful lot of money in interest which would have continued to accrue on your debt if you hadn't taken out the IVA.

    The PPI thing is a nightmare, there are many of us now thinking if we had known about this a couple of years ago we could have reclaimed the PPI money and settled our debts either without an IVA or done a F&F IVA from the start with the money without a 5 year committment, but c'est la vie, you always run the risk with an IVA that your circumstances can improve and you end up paying everything back, which really you should be proud of rather than feeling done over, I'm sure before you took the IVA you had every intention of paying back all your debt? well now you will be able to
    Aug GC £63.23/£200, Total Savings £0
  • Depth_Charge
    Depth_Charge Posts: 970 Forumite
    First Post
    edited 25 October 2012 at 12:41PM
    Options
    Hi

    Interesting

    Simple mathematics say that fees being paid to claims companies in relation to PPI in IVAs has to impact on the amount of money paid into the IVA.

    I thought the whole idea in an IVA was to look after the person in debt and raise the maximum amount of money for the creditors, after all that is what I keep reading as justification for this procedure.

    How can any of the above be correct when there are claims company fees at the level we are seeing as this can mean that thousands of pounds are going outside the IVA.

    This surely has to mean that in some cases the IVA might actually be concluded or shortened at least which would have to be at the benefit of the person in the IVA and the creditors which is what I thought these things and independent advice were supposed to be all about.

    Does not the FSA say that you should claim PPI yourself (I actually basically heard this from the horses mouth again yesterday)

    Who is making money out of this besides the claims companies, do the IVA companies make any, either directly or indirectly and if they do then how can their advice be independent or impartial, not to mention a clear contradiction.

    Are the IVA companies (and other advice agencies for that matter) making it clear about potential PPI claims at the outset of any new arrangements as this could be beneficial to the person in debt and indeed could affect their choice on which debt remedy would be the most appropriate it is also called independent impartial advice I would think.

    Also what is the true legal position for people on claiming PPI in IVAs and how it could affect current ongoing IVAs with regard to completion including the issuing of completion certificates.

    As I have said before IVAs are becoming a disaster zone in my opinion and all we seem to see on the forums now are unhappy people, problems with payments issues, PPI claims, VAT, delays in completion, closure - its a joke really, but one of those that is not funny for the people concerned.

    But hey, we are talking about IVAs again, so I suppose a good question would be, should we be surprised?

    My take on things again
  • milliemonster
    Options
    The problem with reclaiming PPI yourself when you are in an IVA opens up another can of worms, if you reclaim yourself, you are still liable for interest to HMRC which you have to sort out before you pay the remainder into the IVA, if you use a claims company yourself, the problem here arises that if the creditor you reclain from offsets the money from the debt you hold, the claims company still comes to you for their cut for the work they have done, which of course noone in an IVA can afford to pay!

    The IVA companies don't make anything directly out of the PPI reclaims, their are strict rules in place regarding referral fees etc which they are not allowed to take, but they do earn usually 15% of all realisations in an IVA, so obviously if the dividend increases due to PPI then they do get a bit more.

    I guess in some cases IVA's will be shortened or concluded due to PPI but not in all cases. I know some companies are trying to look at concluding IVA's even if there are still outstanding claims due to PPI as they feel it is unfair for debtors to have to continue to wait, but it's all a legal minefield at the minute.

    I know my own IP is taking very cautious steps with regards to PPI reclaims as she wants to ensure the legal position is the very best outcome for her clients and creditors alike without causing more problems
    Aug GC £63.23/£200, Total Savings £0
  • Max_Maxwell
    Options
    Pursuing mis-sold PPI during an IVA must be one of the smartest ideas someone in the insolvency/ PPI claim sector has come up with and if I was able to put on my unbiased, independent, commercial hat, I'd say it was a brilliant marketing strategy. But let's not get carried away.

    On paper, it is a clever idea, and a sure-fire winner for all involved if a valid claim is made - the IP, the creditor and the PPI claim company. Unfortunately, not so for the insolvent party and, in reality, we wouldn't expect it to be. We're not in a very favourable position when it comes to financial windfalls.

    I don't claim to be expert in this field (if financial dealings were my forte I wouldn't be on this forum) but common-sense tells me that if you weren't mis-sold PPI then there is no claim. The entire basis of a PPI claim is that you were sold PPI when you didn't want it. But perhaps you did want it? There seems to be an overriding rather infectious view that everyone who took out PPI didn't want it. I don't believe that.

    Even if the IP is 'greasing your palm' with the incentive of a 2% kickback from any claim, the fact remains that if you weren't mis-sold PPI, there is no claim. 2% of nothing isn't going to go buy a great deal of cat food.

    DepthCharge makes a very valid point:

    "Are the IVA companies (and other advice agencies for that matter) making it clear about potential PPI claims at the outset of any new arrangements as this could be beneficial to the person in debt and indeed could affect their choice on which debt remedy would be the most appropriate it is also called independent impartial advice I would think."

    Everyone of us is entitled to explore these things before agreeing to them. We may be insolvents, but we're not puppets.
  • Gimpsdad
    Gimpsdad Posts: 315 Forumite
    Options
    At the risk of sparring with Depth Charge again, the answer to the question as to whether IP's are advising potential clients as to PPI issues before they sign up then the answer is yes, in my experience. They certainly should be.

    A major problem is that IP's have never done this work previously as there was no need to, and as a consequence of that they not actually licensed to do so. Therefore, the majority of them are using claims companies. Does this detract form the return? Absolutely. Is there much in the way of a viable alternative? Unfortunately not. A debtor could, I suppose, make a claim themselves, but the reality is that the vast majority either wouldn't bother, as there is nothing in it for them to do so, or they would not pursue it as diligently as they should.

    The reality is therefore that returns ARE maximised for creditors, although, as a fair assessment, perhaps some fees are a little steep. Completion certificates are being delayed, but that was always going to happen once the issue blew up, in any 5 year cycle simple maths says that approximately 20% of people will be in year 5 (not entirely true but you get what I mean). You could trumpet, if you were of the anti IVA brigade, that 20% is a huge number and therefore draw the implication that it is a disaster area. Not so would be my retort, and blaming IP's for a mess that is not of their making is a slightly one sided and unbalanced take on the issue. The legal side of it can be looked at in the following link from a debt advice charity http://www.google.co.uk/url?sa=t&rct=j&q=insolvency%20service%20advice%20on%20ppi%20in%20iva&source=web&cd=3&cad=rja&ved=0CEoQFjAC&url=http%3A%2F%2Fwww.debtadvicefoundation.org%2Fquestions%2Fhow-ppi-compensation-dealt-iva&ei=DEqJUJOfFcOR0AWpqYGABw&usg=AFQjCNFWWVKhpTFRVBZYJFmPLcoAzuCayA

    Do bear in mind, as an alternative viewpoint, that the alternative for most debtors in an IVA would have been a DMP. A tool designed solely for the maximum return for creditors, and maybe those with a vested interest, and little regard for the debtor it seems. At least DC has the good grace to point out that an IVA is a deal for the benefit of debtor and creditor alike.
  • Depth_Charge
    Options
    Gimpsdad wrote: »
    At the risk of sparring with Depth Charge again, the answer to the question as to whether IP's are advising potential clients as to PPI issues before they sign up then the answer is yes, in my experience. They certainly should be.

    A major problem is that IP's have never done this work previously as there was no need to, and as a consequence of that they not actually licensed to do so. Therefore, the majority of them are using claims companies. Does this detract form the return? Absolutely. Is there much in the way of a viable alternative? Unfortunately not. A debtor could, I suppose, make a claim themselves, but the reality is that the vast majority either wouldn't bother, as there is nothing in it for them to do so, or they would not pursue it as diligently as they should.

    The reality is therefore that returns ARE maximised for creditors, although, as a fair assessment, perhaps some fees are a little steep. Completion certificates are being delayed, but that was always going to happen once the issue blew up, in any 5 year cycle simple maths says that approximately 20% of people will be in year 5 (not entirely true but you get what I mean). You could trumpet, if you were of the anti IVA brigade, that 20% is a huge number and therefore draw the implication that it is a disaster area. Not so would be my retort, and blaming IP's for a mess that is not of their making is a slightly one sided and unbalanced take on the issue. The legal side of it can be looked at in the following link from a debt advice charity http://www.google.co.uk/url?sa=t&rct=j&q=insolvency%20service%20advice%20on%20ppi%20in%20iva&source=web&cd=3&cad=rja&ved=0CEoQFjAC&url=http%3A%2F%2Fwww.debtadvicefoundation.org%2Fquestions%2Fhow-ppi-compensation-dealt-iva&ei=DEqJUJOfFcOR0AWpqYGABw&usg=AFQjCNFWWVKhpTFRVBZYJFmPLcoAzuCayA

    Do bear in mind, as an alternative viewpoint, that the alternative for most debtors in an IVA would have been a DMP. A tool designed solely for the maximum return for creditors, and maybe those with a vested interest, and little regard for the debtor it seems. At least DC has the good grace to point out that an IVA is a deal for the benefit of debtor and creditor alike.

    Hi

    I would not quite call it sparring, more like a balanced debate and one that is likely to continue for months if not years the way things are going - in fact when you think about it as far as IVAs are concerned it has already been going on for years so that should tell us all something really.

    Now, the anti IVA Brigade, who are they exactly, is it an official body or group?

    Also, love the charity link gimpsdad, nice one:)

    I do take and accept some of your points, but a few basic questions if I may?

    1. Can you definitely give us assurances that no IVA companies make any money out of referring to or using PPI companies either directly or indirectly

    2. How come some of them use companies with such high percentage fees as this clearly means less return for both the parties they are supposed to be acting for?

    3. Why dont they clearly give their clients the chance to reclaim any PPI themselves setting out the possible benefits of this including those already mentioned?
  • FiatFan_2
    Options
    Coincidently the week before we signed up for our iva I got a letter from egg card with a questionnaire to check eligibility for ppi refund. I asked my IP about it and they explained that if egg paid out after the creditors meeting then under the iva all the money would go direct to the creditors and I'd receive nothing. He gave me the choice to pursue it or not, I chose not too. Having read other threads about the IP's forcing ppi reclaims we'll see what happens in the future.
    Roll on DFD, final payment 1st October 2017 :beer:
  • Gimpsdad
    Gimpsdad Posts: 315 Forumite
    Options
    Always happy to answer questions DC, as long as you afford me the same courtesy.

    The anti IVA brigade seems to be anybody that automatically believe they are a bad thing. Someone runs a business on the back of it seems to be the premise that it is automatically bad. A rubbish argument, and even you must acknowledge that. If IVA's per se were bad, then the sacred cow of CCCS would not countenance them. Strange how little we hear criticism wise of CCCS VA dept, even though they are as commercial as anyone else.

    To try and answer your numbered questions...

    1. It is absolutely a no no that IP's make money from PPI claims, as they are not licensed to do so. As there is nothing, theoretically, to stop them getting such licences, some may be a little surprised that they haven't done so. They are entitled, as you point out, under the IVA protocol, to 15% of realisations of assets from a PPI claim.
    2. Good point, as I said before, I do think that some fees are too high, but without defending anyone, it is common sense that higher volume providers are highly likely to deal only with organisations that can process the volume of cases provided to them. If I could afford to live without money for a while, I would absolutely set up a PPI company charging 20% to all IVA firms. How could they turn me down? More money for all, happy days. Except when they realise it is just me and I can't cope with the workload. I suspect you would bash the IP's in that scenario as well.
    3. Already answered that in my original post, the risk is that people don't bother. or try hard enough. Who would get the blame then? Why, the IP who let the debtor to his own devices in claiming, or not as the case may be, any mis-sold PPI.

    As DC's alternative to IVA's is almost always ridiculous, in my opinion but that is only my take on it, DMP's, preferably with people that rely on their wages from creditors (no conflict of interest there then, natch) perhaps a comment on the thread below may be appropriate. Spot the good advice in here, if you can. http://forums.moneysavingexpert.com/showthread.php?t=3533149
  • wingnut37
    Options
    Was your original level of debt £28k or what was agreed to be repaid on the IVA £28k?, £349 a month over 60 months is £20940, adding on the £16k to that would be around £36k which would seem about right.

    The problem is you always owe the full amount of debt until you repay in full or get to the end and the rest is written off, plus fees, it looks like you will be repaying probably 100p in the £1, I know it probably seems unfair but what you have to remember is that interest was frozen at the start of your IVA so you will have saved an awful lot of money in interest which would have continued to accrue on your debt if you hadn't taken out the IVA.

    The PPI thing is a nightmare, there are many of us now thinking if we had known about this a couple of years ago we could have reclaimed the PPI money and settled our debts either without an IVA or done a F&F IVA from the start with the money without a 5 year committment, but c'est la vie, you always run the risk with an IVA that your circumstances can improve and you end up paying everything back, which really you should be proud of rather than feeling done over, I'm sure before you took the IVA you had every intention of paying back all your debt? well now you will be able to


    My total debt was £28k with a payback of just over £20k,my IVA is due to finish in July 2013. I havent heard off my IVA practitioner about anything since i last spoke to them last week.

    I'm all for paying back my debt,just frustrating when i could have enquired about the PPI myself and then the full £16k would have been used toward my debt. Its been so hard with my IVA especially with the missus not working the last year due to ill health,but continued with payments as i was determined to finish the IVA. Nearly there now and at least i'd have paid back my owing in full.

    There are still 2 PPI claims going through with my other creditors so who knows? Out of 6 creditors ive had 2 successful and 2 not,reading on here though it doesnt look like i'll be hearing off Mint or Capital One anytime soon.
  • Depth_Charge
    Depth_Charge Posts: 970 Forumite
    First Post
    edited 28 October 2012 at 2:27AM
    Options
    Gimpsdad wrote: »
    Always happy to answer questions DC, as long as you afford me the same courtesy.

    The anti IVA brigade seems to be anybody that automatically believe they are a bad thing. Someone runs a business on the back of it seems to be the premise that it is automatically bad. A rubbish argument, and even you must acknowledge that. If IVA's per se were bad, then the sacred cow of CCCS would not countenance them. Strange how little we hear criticism wise of CCCS VA dept, even though they are as commercial as anyone else.

    To try and answer your numbered questions...

    1. It is absolutely a no no that IP's make money from PPI claims, as they are not licensed to do so. As there is nothing, theoretically, to stop them getting such licences, some may be a little surprised that they haven't done so. They are entitled, as you point out, under the IVA protocol, to 15% of realisations of assets from a PPI claim.
    2. Good point, as I said before, I do think that some fees are too high, but without defending anyone, it is common sense that higher volume providers are highly likely to deal only with organisations that can process the volume of cases provided to them. If I could afford to live without money for a while, I would absolutely set up a PPI company charging 20% to all IVA firms. How could they turn me down? More money for all, happy days. Except when they realise it is just me and I can't cope with the workload. I suspect you would bash the IP's in that scenario as well.
    3. Already answered that in my original post, the risk is that people don't bother. or try hard enough. Who would get the blame then? Why, the IP who let the debtor to his own devices in claiming, or not as the case may be, any mis-sold PPI.

    As DC's alternative to IVA's is almost always ridiculous, in my opinion but that is only my take on it, DMP's, preferably with people that rely on their wages from creditors (no conflict of interest there then, natch) perhaps a comment on the thread below may be appropriate. Spot the good advice in here, if you can. http://forums.moneysavingexpert.com/showthread.php?t=3533149

    Hi

    Astonishing stuff, Gimpsdad

    In my opinion, the above post is that bad as far as genuine non - profit making independent, impartial advice is concerned that I will give you the chance to come again before I reply.

    For example - show me my ridiculous alternatives you allude to, and your answer to question 3, well, its a joke really isn't it Gimpdad?

    Oh, and the link you refer to is nothing to do with this thread and as far as I can see, neither me or you have contributed to it anyway.

    Another thing - I did not point anything out about the protocol concerning the 15%, that was another poster
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 343.7K Banking & Borrowing
  • 250.2K Reduce Debt & Boost Income
  • 450K Spending & Discounts
  • 235.8K Work, Benefits & Business
  • 608.9K Mortgages, Homes & Bills
  • 173.3K Life & Family
  • 248.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards