Can a bank setoff a PPI award against an extinguished debt

sussexbhoy

Bermonia wrote: »

It is not about pursuing... it’s same as England except for timescale, process is the same and lender has right offset against its loses... they are merely blocked from taking action to recover debt.

No it's not, this is from the fact sheet:-
If you have started to make payments on a debt after the five year limitation period has run out, your payments will not have revived the debt. The debt is still ‘extinguished’ and legally no longer exists. You could even argue that the creditor should pay back the money that you have paid because there was no debt to be paid off.

Bermonia

That’s not how I read it... it’s also not how FOS see it.

Using your argument, if you could say there was no debt then one could equally say that there was no PPI on said non existent debt.

The limitations act merely refers to lenderstaking action to recover debt... people may have tried and even somehow luckily argued otherwise, however this is not the case.

sussexbhoy

Bermonia wrote: »

That’s not how I read it... it’s also not how FOS see it.

Using your argument, if you could say there was no debt then one could equally say that there was no PPI on said non existent debt.

The limitations act merely refers to lenderstaking action to recover debt... people may have tried and even somehow luckily argued otherwise, however this is not the case.

There is only one way to read it, the debt legally no longer exists after 5 years. the word legally is all you need. This is Scotland don't forget, it's a different Act of Parliament from England.

Nasqueron

sussexbhoy wrote: »

There is only one way to read it, the debt legally no longer exists after 5 years. the word legally is all you need. This is Scotland don't forget, it's a different Act of Parliament from England.

Do you have any case studies / examples where in Scotland a bank has tried to offset a PPI refund against an old debt (NOT reactivating, NOT chasing) and has been told they must refund?


Remember, you are talking about a debt no longer existing in legal terms, they cannot chase it but that is separate to the bank offsetting a refund internally because the debt still exists even if they can no longer treat it as live.

mjm3346

In England, Wales and Northern Ireland, the debt remains in existence but a creditor is unable to initiate court proceedings to recover it. In Scotland, a debt that is statute barred is ‘extinguished,’ which means that it no longer exists in law.



If they took the PPI presumably you could ask them to refund it

Scotland

The creditor can’t do anything to collect an extinguished debt because the law says the debt no longer exists. If you’ve made any payments to an extinguished debt, you could ask the creditor to refund them.

https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred-debt.aspx

-taff

If the debt is extinguished, doesn't that mean then that there was no PPI paid on it, because it doesn't exist?

Nasqueron

mjm3346 wrote: »

In England, Wales and Northern Ireland, the debt remains in existence but a creditor is unable to initiate court proceedings to recover it. In Scotland, a debt that is statute barred is ‘extinguished,’ which means that it no longer exists in law.



If they took the PPI presumably you could ask them to refund it



https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred-debt.aspx

Again this is answering a different question to what was asked.


Not being able to chase or activate a debt does not mean the debt doesn't exist in the bank's books and does not say that the bank cannot offset a PPI refund against that debt.


As above also, if the debt "no longer exists", then no PPI exists so nothing to refund.

-taff

This makes interesting reading, at least the letter to the OP does


https://www.trust-deed.co.uk/forum/topic.asp?TOPIC_ID=7329


And this one


https://shepwedd.com/knowledge/protected-trust-deeds-and-ppi-compensation-opposing-judgments-create-uncertainty-scotland

[Deleted User]

there is nothing to offset.

I remain unconvinced

mjm3346

Nasqueron wrote: »

Again this is answering a different question to what was asked.


Not being able to chase or activate a debt does not mean the debt doesn't exist in the bank's books and does not say that the bank cannot offset a PPI refund against that debt.


As above also, if the debt "no longer exists", then no PPI exists so nothing to refund.

There is no debt to "activate" in Scotland not only is it not possible to chase by legal means it is totally extinguished so there is nothing to put any offset against - If you make payments against a statute barred debt in England the lender can keep them but not in Scotland

The creditor can’t do anything to collect an extinguished debt because the law says the debt no longer exists. If you’ve made any payments to an extinguished debt, you could ask the creditor to refund them.