If you are currently in an Individual Voluntary Arrangement (IVA) there is nothing to stop you making a claim for mis sold PPI. The fact that you are unable to pay the debt that you owe and have started the Arrangement is not relevant. The two situations have no bearing on each other.
However, it is important to understand that any compensation payment that you receive while you are still in your IVA will be treated as windfall. This means that you will have to pay it into your Arrangement for the benefit of all of your creditors.
If you claim for PPI during your Arrangement without the knowledge of your Insolvency Practitioner (IP) and the compensation is paid directly to you it is important that you tell them.
BMD Tip: You must not spend any of this money even if you desperately need it until you have agreed that you can do this in writing with your IP. If you do so and they subsequently find out it could be reason for them to fail the whole arrangement.
Will my IVA company force me to claim for PPI?
Once you start an IVA one of the things that you need to expect is that your IP will ask you to make PPI claims through their preferred claims management company. You cannot refuse this request. If you do not cooperate with your IP’s request they could decide to fail your Arrangement.
The receipt of PPI compensation will not help pay off your Arrangement any faster. It will simply mean that your creditors receive more of their money back. You will still have to pay all of your remaining payments and meet any other payment terms of your agreement.
BMD Tip: If any claims are not finalised by the time your agreed monthly payments have finished your IVA company may delay the formal completion of the Arrangement until this has been done. If this happens one option is to agree to a Deed of Assignment which will allow your IP to complete your IVA but keep any subsequent PPI compensation that is paid.
What if I delay making PPI claims until after my IVA?
If a PPI compensation payment is made to you after your IVA is completed (and you have certificate of completion) then if you get the right advice it is much more likely that you will be able keep any compensation for yourself.
As such if you want to avoid handing over any compensation you receive to your insolvency practitioner you should delay your claim until after your Arrangement is completed. Of course this is not always possible if you have been asked to make a claim.
There has currently been no indication from the banks that there will be a time limit set within which PPI claims have to be submitted. As such even if your IVA still has some time yet to run it is conceivable that you could delay a PPI claim until after its completion.
Can I make PPI claims against debts which were not in my IVA?
You may have had debts that you paid in full prior to your IVA which are not included in the agreement. If this is the case your IVA company will not know about them and will not normally be able to ask you to make claims for PPI against them.
Where this is the case there is a strong chance that you can still claim for mis sold PPI against these debts after your IVA is completed. However you will need specialist advice to be able to do this.
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