IVAs & PPI Claims

Depth_Charge

Hi

There does seem to be a lot of posts and a fair bit of confusion around on the subject of PPI claims when in an IVA.

Do people 'have' to use a claims company that can take a large chunk in commission etc (some known to be around the 30% mark) or can they do it themselves?

How taking 30% of any PPI claim (or whatever the amount may be) out of the IVA altogether can be in the interests of the person in the IVA (or the creditors for that matter) is beyond me and sometimes these can be substantai amounts that could in theory (depending on individual circumstances) affect the length of the IVA or go towards a full & final settlement say

Should people be made more aware of potential PPI claims before entering an IVA or any other debt solution, well of course they should as this could affect the solution route they eventually decide on (its called independent impartial advice)

Heres a link to the new Stepchange site on claiming PPI while on an IVA that I found very interesting and informative.

http://moneyaware.co.uk/2012/05/can-i-reclaim-ppi-while-on-an-iva/ (paragraph quoted below)

"The most important thing to remember is that you don’t need to use a claims management company to reclaim PPI. From our experience using a claims management company could cause a big headache if you’re already in a debt solution."

Ive given Stepchange a fair bit of scrutiny on DMPs, the CFS etc of late and believe that is the correct thing to do but the above link on IVAs & PPI tells it right in my opinion and hats off to Stepchange on this occasion.

I have had a look round one or two profit making company sites and not yet found much information similar to the Stepchange one, maybe its the rehabilitation thing thats holding things up.:) Of course it all could be there and I have missed things.

After advice and fully understanding the IVA / PPI position its down to peoples choice again at the end of the day.

My take again as always with an opinion or two thrown in.

Comments welcome and that includes the pro - IVA brigade

UpToMyNeckInIt

Hi DC,

Interesting points as usual, but there is another aspect one needs to consider:

Speaking as an IVA customer, I would have no issues re-claiming PPI to increase creditor dividend (Not that I believe I have ever taken any out). After all, if I wasn't in the IVA, and received a windfall, chances are I would use it to pay off some debt anyway.

Personally speaking however, I think it is best to allow your IP to do all the donkey work in this situation. (OK, I know that way 30% or more of any realisations go to the IVA firm and the PPI claim firm). But I'm not going to see a bean of it regardless.

I understand that some feel a moral obligation to do their own PPI reclaim to pay 100% into the IVA pot - all well and good of course, providing the company owing the mis-sold PPI cooperates and pays out.

BUT, I am aware of at least one IVA customer initiating their own PPI claim, via a company (possibly after the direct approach has not worked). I don't know the precise mechanism here, but the payout has apparently gone into the IVA, and then the customer gets the bill from the PPI reclaim company. This cost has been disputed by their IP who refuses to pay it accordingly. So now the customer has a debt that falls outside the IVA, and the issue of how to pay it.

At least if the IP uses a claim firm, THEY get the bill, not the customer.

I for one am not willing to take that risk. If/when my IP wants to investigate my PPI situation, I'm just going to sign the forms and send them back. (I'm going to make sure they do so well before the end of my IVA, so as not to hold up the completion process).

Depth_Charge

UpToMyNeckInIt wrote: »

Hi DC,

Interesting points as usual, but there is another aspect one needs to consider:

Speaking as an IVA customer, I would have no issues re-claiming PPI to increase creditor dividend (Not that I believe I have ever taken any out). After all, if I wasn't in the IVA, and received a windfall, chances are I would use it to pay off some debt anyway.

Personally speaking however, I think it is best to allow your IP to do all the donkey work in this situation. (OK, I know that way 30% or more of any realisations go to the IVA firm and the PPI claim firm). But I'm not going to see a bean of it regardless.

I understand that some feel a moral obligation to do their own PPI reclaim to pay 100% into the IVA pot - all well and good of course, providing the company owing the mis-sold PPI cooperates and pays out.

BUT, I am aware of at least one IVA customer initiating their own PPI claim, via a company (possibly after the direct approach has not worked). I don't know the precise mechanism here, but the payout has apparently gone into the IVA, and then the customer gets the bill from the PPI reclaim company. This cost has been disputed by their IP who refuses to pay it accordingly. So now the customer has a debt that falls outside the IVA, and the issue of how to pay it.

At least if the IP uses a claim firm, THEY get the bill, not the customer.

I for one am not willing to take that risk. If/when my IP wants to investigate my PPI situation, I'm just going to sign the forms and send them back. (I'm going to make sure they do so well before the end of my IVA, so as not to hold up the completion process).

Hi

Interesting points of view and thanks for the comments

What has moral obligation got to do with people making PPI claims themselves?

Dont you think that IVA companies should contact or sit with their clients and explain the benefits of all of any potential PPI claims being paid into their IVAs, its incredible not to in my opinion (maybe some do, I dont know for sure)

I thought the IPs were supposed to be working in the best interests of their clients (and the creditors for that matter) after all they are being paid substantial fees to do so.

Do they not receive a percentage of any PPI claims and if so then should they not act in the best interests of their clients.

If all the monies in any PPI claim is paid into the IVA then surely in some cases (depending on circumstances of course) it could shorten the term of the IVA and perhaps even leave an IVA client with some of the surplus.

In failing IVAs could not the whole amount of any PPI claim make the difference in a full & final settlement offer being accepted or the IVA failing. I have recently been involved with a couple of such cases myself and am awaiting the outcome.

How come Stepchange are saying what they are saying then, whats the difference, its the same Stepchange (or CCCS) that you and others continue to criticise on here and elsewhere.

Dont you think that people considering an IVA (or any other debt solution) should be made fully aware of the potential PPI claims before they enter any long term solution as surely this could affect their decisions.

Do IVA companies now make the PPI issue clear at the outset?

If there are issues & problems with PPI claims relating to IVAs then surely the IVA companies should be speaking up? Other debt advice agencies do, its called social policy evidence, but hey these agencies dont seem to talk about rehabilitation and punitive measures for those struggling with the misery of debt, maybe thats the difference and of course some of them are not profit driven either.

Maybe agencies such as the CABs & Stepchange should advise people to use PPI claims companies instead of doing it themselves via sites such as MSE & the FOS - even consider taking a huge percentage chunk for themselves in the process and why not consider putting their advisers on commission etc, but only if they hit their sales and profit targets mind.

Some are saying that PPI claims in IVAs could be the next big scandal, we will have to wait and see I suppose.

PS - Have you read the DRF links and paragraphs I have put up by the way, they make some of the criticism aimed at Stepchange (CCCS) look a bit shaky to say the least dont you think?

Here they are again if you missed them

4.2.7DRF believes debt management plans (DMPs) and IVAs are both intrinsically rehabilitative, as a consumer chooses to repay as much of their debt as they can afford, rather than walking way (which bankruptcy—whilst the consequences are drastic—usually allows).

4.2.8DRF believes that consumers should be rewarded for demonstrating that they can manage their money (in an IVA or DMP) by agreement from creditors to allow them access to financial products at prime rates. Bankruptcy and DROs should be available for the most vulnerable and those without property assets but should be as punitive as it is now (with a higher rate of Income Payments Agreements and Orders) to incentivise those debtors who can pay to choose a more rehabilitative (and productive for creditors) regime.

Independent impartial advice?

I know a few people who struggled to get back up off the floor with laughter after reading these.

Maybe someone will put the above DRF paragraphs on the other site you keep referring to, would be interesting to see the replys.

Just my take again as always and the door is open on here for DEMSA or DRF to comment. Hope they choose to take the opportunity, but if I am honest, then I very much doubt that they will:)

UpToMyNeckInIt

OK,

Forget the 'moral' thing - irrelevant.

My firm did ask me at the outset of the IVA process if I thought I might be able to get a PPI refund to increase dividend (to which I honestly answered ‘no’). Can't speak for other IP’s though.

As for the fees received by the IVA firms for these additional 'realisations': In my case, the creditors have capped the fees to what has already been agreed, so 100% of anything extra goes to them.

However, I understand some IP's get paid on a percentage basis for additional realisations over and above the initially agreed minimum dividend (I've heard the figure of 15% banded around by 2 firms). Quite an incentive I suspect to squeeze the IVA customer! (Conversely, I wonder if my IP will bother working particularly hard to raise additional funds. Time will tell I guess).

Either way, the creditors obviously accept, agree and cap fees as they deem necessary in a given situation, and appear content to allow IP's to use PPI claim firms to take their cut as well. Until that changes, I don’t know what else to say.

Interesting point: As you say, if a customer receives a large PPI payout, it could quite possibly be enough to conclude the IVA (repayment of all debt + IP fees etc). However, there are a few annoyed IVA customers who believe their PPI windfall will be enough to do this, but fail to take into account IP fees, and the cut taken by the PPI reclaim company, and find they still have to continue with part/all of the original IVA term. (I’m sure of this group, there is a percentage who, with the benefit of hindsight, could have claimed PPI and avoided the need to enter an IVA in the first place). All boils down to properly researching your options at the outset (or not as the case may be).

Interestingly, my Wife is using a firm for a PPI reclaim for an 'Access' credit card account, closed over 9 Years ago. She had long-since lost all the account details, so just how would she be able to do her own claim? She did try, but as soon as she mentioned this fact, that was that. (She did claim PPI back last Year on another account on her own though where she still had the details).

Anyway, the company she is using have been able to dig up these details, and it looks like the thick end of £2,000 is claimable, less their 25% cut.

We don’t object to that: £1,500 is better than nothing. Best bit is that because these are in her name (and the IVA is in my name only) 'we' get to keep the lot!!!

Point is, I think PPI companies have their place, particularly for people who have lost their old account details, or are in an IVA (and they have been asked to use that firm by their IP).

I am uncertain of what aspect of my CCCS criticism you refer to or how it is relevant to people in IVAs claiming PPI? Please elaborate.
Gotta question the ‘rehabilitative’ nature of DMPs/IVAs. I believe I have learnt my lesson, but given the 35-40% IVA failure rate, I wonder just how many people are going to do so as well. (After all, many of these failures may then result in bankruptcy anyway). Also there is one person I am aware of on another forum proposing his second IVA!!! (Having built up £30k debt since the last one).

However, the notion of ‘rewarding’ IVA customers with access to prime financial products/services is extremely interesting. Perhaps deserves its own thread? (If you think there is more than just the slightest chance such an incentive will ever be realised).

Suspect there are some on this forum who think that IVAs are a bad thing generally, and that the last thing the industry needs to be doing is ‘rewarding’ us!!! (I’d settle for just being able to open a normal high street current account - less overdraft of course. Instead of some restricted basic account).

Depth_Charge

Hi

Thanks for the reply, you put up some interesting stuff up to be fair and a steady post this time

Ive nothing else to add on the PPI issue at this stage, its there for all to see and I stand by it.

I dont think I need to say much other than CCCS do seem to have had it thrown at them about DMPs and their impartiality questioned perhaps.

I am pretty sure that you (and others on the other forum) will have read the DRF links and paragraphs below.

4.2.7DRF believes debt management plans (DMPs) and IVAs are both intrinsically rehabilitative, as a consumer chooses to repay as much of their debt as they can afford, rather than walking way (which bankruptcy—whilst the consequences are drastic—usually allows).

4.2.8DRF believes that consumers should be rewarded for demonstrating that they can manage their money (in an IVA or DMP) by agreement from creditors to allow them access to financial products at prime rates. Bankruptcy and DROs should be available for the most vulnerable and those without property assets but should be as punitive as it is now (with a higher rate of Income Payments Agreements and Orders) to incentivise those debtors who can pay to choose a more rehabilitative (and productive for creditors) regime.

What happens to the rehabilitation concerns when an IVA fails as tens of thousands do?

I wonder what solutions the fee chargers make the most money from?

Do you think agencies such as Stepchange & the CAB should follow what the 'DRF believes' when advising people in debt? I dont think they have quite the same approach to be honest especially as far as the 'punitive' bit is concerned.

TheFreeDictionary definition of punitive below

http://www.thefreedictionary.com/punitive

People can make there own minds up

Anyway the offer still stands to the DRF & DEMSA, bet ya they have been looking in, bet ya even more they wont join in, dont blame em though... do you?

Just my take again and a few questions

Depth_Charge

Hi

Interesting article on PPI claims - calls for time limits

http://www.bbc.co.uk/news/business-21080468


You would hope those advising people on debt solutions would be telling people about potential PPI claims before they enter a debt solution such as an IVA as it may make a difference as to the choice they make.

Time limits, if they are introduced (and its a big if in my opinion but could happen) may have implications and make things tricky and therefore people need to made more aware overall.

Wonder what the IVA companies make of this, mmm let me guess.

Just my take again

UpToMyNeckInIt

Depth_Charge wrote: »

Hi

Interesting article on PPI claims - calls for time limits

http://www.bbc.co.uk/news/business-21080468


You would hope those advising people on debt solutions would be telling people about potential PPI claims before they enter a debt solution such as an IVA as it may make a difference as to the choice they make.

Time limits, if they are introduced (and its a big if in my opinion but could happen) may have implications and make things tricky and therefore people need to made more aware overall.

Wonder what the IVA companies make of this, mmm let me guess.

Just my take again

...I believe most firms do ask about PPI at the initial stages (the ones I approached certainly did). It's obvious isn't it: If you think you have a PPI claim, use it to reduce your debt, before considering going down the DMP/IVA route.

I think that this is mostly a problem for existing IVA customers, whose plans were in effect prior to the banks 'opening the sluice gates' so to speak.

Speaking personally, bring on the time limit: I never took out PPI, so the whole reclaim process won't hold up my IVA 'if' it comes in.

Depth_Charge

UpToMyNeckInIt wrote: »

...I believe most firms do ask about PPI at the initial stages (the ones I approached certainly did). It's obvious isn't it: If you think you have a PPI claim, use it to reduce your debt, before considering going down the DMP/IVA route.

I think that this is mostly a problem for existing IVA customers, whose plans were in effect prior to the banks 'opening the sluice gates' so to speak.

Speaking personally, bring on the time limit: I never took out PPI, so the whole reclaim process won't hold up my IVA 'if' it comes in.

Hi

Do they really?

Its good to hear

Can you evidence this?

I will have a look round a few websites and forums see if I can find confirmation etc

Meanwhile a few questions spring to mind with this.....

What advice do they give as to making a claim.

Is it - you must claim anyway just to see if you have any even if the person says they dont?

Also do they advise people to make claims themselves and not to use a claims company that takes up to 33% in fees say?

I ask these questions as I beleve that there are agencies and regulatory bodies that advise people to claim themselves and with a nod to whats best for the person in debt (its that independent impartial advice part of me again)

Just my take, thoughts and questions, but nevertheless interesting ones dont you think.

UpToMyNeckInIt

Hi DC,

Bearing in mind that two of the IVA providers I approached were CCCS & NDL - so fair play - I would expect 'best practice'.

Being the cynical person that I am, I suspect the company I finally went with were asking about the PPI thing with a view to contributing to the IVA, rather than as a possible alternative.

I got no further advice in this respect as such, because I told them outright that I never took PPI out.

Anecdotally, other IVA customers report that their IP 'requires' them to claim PPI using their nominated company. (And as per my earlier post, personally I would go along with that, as it won't benefit me one way or the other).

When/if my company ever want me to attempt a PPI reclaim, I will let you know how it goes.

Depth_Charge

UpToMyNeckInIt wrote: »

Hi DC,

Bearing in mind that two of the IVA providers I approached were CCCS & NDL - so fair play - I would expect 'best practice'.

Being the cynical person that I am, I suspect the company I finally went with were asking about the PPI thing with a view to contributing to the IVA, rather than as a possible alternative.

I got no further advice in this respect as such, because I told them outright that I never took PPI out.

Anecdotally, other IVA customers report that their IP 'requires' them to claim PPI using their nominated company. (And as per my earlier post, personally I would go along with that, as it won't benefit me one way or the other).

When/if my company ever want me to attempt a PPI reclaim, I will let you know how it goes.

Hi

Try not to be so cynical or you might end up like me and a few others.

The IVA / PPI thing, mmm, I think there is a fair bit of mileage left in this one yet.

Could come back in the future to bite the IVA industry too..in my opinion of course

I wiil watch out for what happens:)

Jam73

Please, please, do't ever,ever use those claims company when you're on IVA!!! It's so easy to do it yourself, all you need to do is to download the PPI questionnaire in the Financial ombudsman website and send it to your creditors. That's what I did and they responded to me with their offer!