PPI refund to pay cleared debt?

sophie_colleran

a few years ago i had a DMP with Stepchange and as far as i am aware First Direct a)froze interest and b) sold on the debt (I have no records anymore of either or to who) around 4 yeats ago i came into a lump sum of money and paid of the DMP at the balances that were outstanding at that time - no negotiating lower amounts etc. I have recently started to claim back PPI and First Direct have said they owe me c £9k however they are now saying i owe them c£11k that i knew nothing about and that the ppi refund will be used towards that.
questions: a) how can i have such a large debt i know nothing about b)is this even right? c) what can i do to sort this?

thanks

dunstonh

a) how can i have such a large debt i know nothing about

Was the debt written off or reduced as part of an agreed settlement or payment agreement? If so, then the higher amount still exists. They have just agreed not to pursue you for it.

b)is this even right?

Yes. If you are in arrears, defaulted or had amounts written off, then they can use the redress against the debt rather than pay it to you.

The rules allow that and it is logical. After all, why should you be refunded something you haven't actually paid for.

sophie_colleran

the only reduction in the debt was the interest frozen at the point i started the DMP (probably a good 3 years into the loan) i paid the full amount i thought outstanding when clearing it. no arrears, default, does frozen interested could as a reduction?

and why wasn't I at least told about it 4 years ago? even if they agree not to pursue it surely I should have known that it existed

i did pay a lot of what they are refunding and without it being there in the first place might not have needed to choose the route i did with a DMP. more than happy for them to correctly work it out and share their workings. I am not trying to get back money i am not entitled to.

dunstonh

, does frozen interested could as a reduction?

yes

and why wasn't I at least told about it 4 years ago? even if they agree not to pursue it surely I should have known that it existed

When you go into an agreement, it often involves as reduction/write off.

If the redress was greater than the amount outstanding, you would get the surplus.