Provident refund to be paid to debt collection company

jodies19

Hi I recently was successful in claiming compensation from provident for missold loans but they are applying the compensation to one of the loans still held with a debt collection company - surely if I was missold the loan I wouldn't still be liable or would I????

[Deleted User]

The compensation will offset any remaining amount owed.

Compensation is different from a loan being written off.

nyermen

There's a misunderstanding sometimes that "missold" means the whole debt (principal + interest) is written off.  In reality, the loan was paid out, so that debt is valid.  Compensation normally involves any interest payments made plus "statutory interest" on those interest payments as well. 
I presume that is the compensation being paid out.  If the original debt is still due, then indeed that compensation would likely be offset.

The only thing I'm unclear on is whether the debt being properly "sold" to a DC allows such offset as surely the original loan company (paying the compensation) and the DC are independent institutions.
Even more unsure if the loan is part of an arrangement (bankrupcy, DRO, etc) then it would be unequal treatment of debts perhaps.

But zx81 is very knowledgeable and if they've not raised it then probably not.

sourcrates

Provident`s pay-out will be very small compared to the loan you originally took, I think most customers are getting around 5p in the £, according to another post on here.

And the poster above is right, you don`t get the capital sum refunded, only the interest and any charges, and in the case of Provident, only a fraction of that due to their scheme of arrangement.

jodies19

They have actually awarded 900 but will be paying it to the debt collection company 

Exodi

jodies19 said:

They have actually awarded 900 but will be paying it to the debt collection company 

Without knowing the original loan amount, interest rate and term, "900" is meaningless to us.

Given that Provident have loans that go over 1000%+ APR, it's not impossible the principle amount was originally quite small.

sourcrates

jodies19 said:

They have actually awarded 900 but will be paying it to the debt collection company 

As has already being said, winning an affordability complaint in no way diminishes your liability to pay the outstanding balance of the debt concerned, unless the company has chosen to also write off that outstanding balance under the terms of the redress package you have received.

In your case it appears a £900 refund of interest and charges will be applied to your outstanding debt to the company, thus reducing your indebtedness as a whole.

That may or may not wipe out the full debt, but you may still have a balance outstanding.

jodies19

I think I'm querying more so the paying to effectively a third party on my behalf I have other priority debts which you would think could be paid instead 

[Deleted User]

The company will always use redress to clear the debts you have with themselves. They won't send it to other creditors, even if you think they're more important.

jodies19

They have sold the debt its no longer with them

[Deleted User]

It's probably just being handled by the DCA.. The money still relates to the outstanding debt.

Bottom line is, you can't take their money from them.