If you are currently in an IVA you may be required to make a PPI claim. Any compensation subsequently awarded will normally have to be paid into the Arrangement.
Included in this article:
- Can you be forced to make a PPI Caim during a IVA?
- What happens to any compensation paid?
- Do you have to claim if you did not have PPI?
- Are you allowed to keep compensation paid after your IVA?
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Can you be forced to make a PPI Claim during your IVA?
During an IVA you may be asked by your Insolvency Practitioner (IP) to make a PPI claim against your creditors. If this happens you will have to agree to the request.
The reason is that one of your obligations is to co-operate with your IP to maximise the amount you pay back to your creditors. Making PPI claims which might increase the money paid into the agreement clearly falls within this requirement.
If you do not co-operate your IP could withhold your Completion Certificate at end of the Arrangement. As a worst case they could treat the issue as a reason to fail it altogether.
If you are asked by your Insolvency Practitioner to make a PPI claim during your IVA you must give your authorisation for the claims to go ahead.
What happens to any PPI Compensation paid during your IVA?
If you receive compensation as the result of a PPI claim during your IVA it must be paid into the Arrangement. This is because it is a windfall. More often than not the bank will pay the money direct to your IP.
Where the amount of compensation you receive is less than £500 then you might be able to keep it. However this will depend on the terms of your Arrangement.
You might be allowed to keep some of the cash if you are suffering a period of particular hardship or have a financial emergency. However this will have to be agreed with your IP.
If you are paid PPI compensation directly at any time during your IVA you must inform your IVA Company. If you spend the money without their consent this could lead to the failure of your Arrangement.
Do you have to claim if you did not have PPI?
You may believe that you were not mis sold PPI. Perhaps you do not remember ever taking out the insurance or if you did you do not believe there was any mis selling involved.
In these circumstances you should still co-operate with your IP. If they ask you to make claims you have nothing to lose and you cannot then be accused of not co-operating.
Even if you believe you were never mis sold it is possible that you were and do not realise it. It will cost you nothing to find out and it may mean your creditors receive more of their money back.
Are you allowed to keep Compensation paid after your IVA?
After you have finished your monthly payments your IVA does not officially end until you have received your Completion Certificate. During this interim period any windfalls you receive still have to be paid into the Arrangement.
As such if PPI compensation is awarded after you have made your final payment but before you have your Certificate it must still be handed over.
Your IVA Company may delay the issue of your Completion Certificate for this reason. If you feel this is the case threatening to make a formal complaint against them may speed up the process.