Cant Reclaim PPI because of Bankrupsy

DJ1418

Hi All,

I was recently contacted by a PPI claims company who told me they could investigate any claims as far back as 20 years. Having been told the banks could only go back 6 years I was a bit dubious, but agreed.

They got back to me and told me I had a claim on PPI from 1998, while taking some details she asked me if Id ever been made Bankrupt, I confirmed that I had but it was a good few years after the PPI loan. At this point she consulted her manager and informed me that it would be pointless continuing the claim as the bank would probably take any refunds.

Do I have a claim?

Cheers.

[Deleted User]

PPI redress is treated as a pre-bankruptcy asset and, as such, belongs to the Official Receiver for redistribution to your former creditors.

So you can certainly complain, but you will never get anything personally.

You can read all about here on the sticky thread from the Bankruptcy Board;
https://forums.moneysavingexpert.com/discussion/3766585

DJ1418

Thanks for the reply,

Some more information on the PPI loan,
This loan was took out on 1997 and settled in 1998, the Bankruptcy didn't occur until 6 years later.

dunstonh

This loan was took out on 1997 and settled in 1998, the Bankruptcy didn't occur until 6 years later.

Doesnt matter how long before it was. Anything before bankruptcy is a pre-bankruptcy asset.

DJ1418

I don't quite understand, when does PPI become an asset?
The ruling was only made for people to claim PPI a couple of years ago.

dunstonh

I don't quite understand, when does PPI become an asset?

PPI redress is a refund of contributions on something that was paid prior to bankruptcy.

If you paid PPI premiums after the bankruptcy, then the refund is yours. If you paid the PPI premiums before the bankruptcy then they belong to the OR to distribute to the creditors your failed to repay.

The ruling was only made for people to claim PPI a couple of years ago.

There has been no ruling specific to PPI. It uses the same complaints process that has existed since 1988. However, you are mixing up two different things. One is the ability to complain and one is the treatment of any redress.

The bankruptcy rules apply to PPI redress in the same way they would any other money you come into because of something bought, paid for or owned prior to bankruptcy. The point of bankruptcy is to draw a line in the sand to allow you to start again. Not to financially gain from it.

DJ1418

Ok, say for talking sake, the PPI claim redress was in the region of 20 - 30,000 and I was declared bankrupt
owing 15,000, where does that leave me considering I knew nothing about this potential asset.

dunstonh

Rather than us put in our own words, here are the words of the insolvency service (i've bolded the key bits):


1. Overview
PPI is an insurance contract generally taken out when a loan or credit card is obtained. This contract is an asset, as is the right to complain if it was mis-sold.

If you took out PPI prior to becoming bankrupt, then the PPI and any claim that it was mis-sold must be handed over to your bankruptcy trustee or official receiver.

This is the same as other financial products which have been mis-sold including other loan and credit card protections, bank accounts, interest rate deals and loans.

2. Why must the PPI mis-selling claim be paid to the trustee?
The right to make a claim comes into existence when the PPI or other product was originally mis sold. It is still an asset in the bankruptcy even if you didn’t know you could claim compensation until after your bankruptcy. PPI is a separate contract to the loan or credit card it covered. Even if the loan has been repaid in full, any compensation for mis-selling is still a bankruptcy asset.

3. Can I claim the funds for myself?
The mis-selling claim belongs to the bankruptcy estate. Funds cannot be returned to you under any circumstances. Ill health, hardship or discharge from bankruptcy does not entitle you to the funds. If you make or continue a mis-selling claim after you become bankrupt, any funds must be paid to the trustee. You might still be liable for fees if you agree to pay someone to make the claim for you. For further information, contact the Insolvency Service PPI team.

source: https://www.gov.uk/government/publications/bankruptcy-payment-protection-insurance-ppi-mis-selling-claims/bankruptcy-payment-protection-insurance-ppi-mis-selling-claims

magpiecottage

In theory you might be able to make such an argument - in which case the redress would first be used to pay off your creditors and you might get back anything that was left.

However, if your redress was £20-£30,000, that suggests an enormous loan.

Mersey_2

magpiecottage is correct.


The above just means that funds must be surrendered to the estate in order to be administered and must not be paid to the individual.


A receiver could not keep more than was ever owed though (after fees).


Although that would be an extremely rare position - for a PPI complainant to be owed more by a bank than he owed all creditors - as magpie states and I've not heard of any in recent times. (The position is also different in Scotland, as another poster - who received some PPI redress after bankruptcy - mentioned recently).

[Deleted User]

Mersey wrote: »

that would be an extremely rare position - for a PPI complainant to be owed more by a bank than he owed all creditors

Well, the OP did say for "talking sake" (which is why I said it would be better placed for discussion elsewhere).