Can a bank use my PPI compensation to pay off debt?

Bank held back PPI CompensationYou can claim for PPI compensation against a bank you still owe money to. Whether or not you will be paid the cash you are awarded will depend on the status of your debt.

  • Claiming for PPI against a debt you still owe
  • Can you claim for PPI against an account in arrears?
  • Can you keep the compensation if you are in a DMP?
  • What if the debt is already settled or Statute Barred?

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Claiming for PPI against a debt you still owe

There is nothing to stop you claiming for PPI compensation against a debt you are still repaying. However if the claim is upheld before sending you the cash the bank will check the status of your account.

The money will be paid to you given non of your accounts are in arrears. The payment is normally in the form of a cheque. This money can then be paid into your account with the bank or anywhere else you choose.

You are free to decide what to do with the money you have received. It can be used for whatever you like and does not have to go towards paying off the debt you owe.

Can you claim for PPI against an account in arrears?

You can certainly claim for PPI compensation if your account is in arrears. The fact you are struggling to repay the debt has no bearing on whether you were mis sold PPI.

However you may not directly receive any compensation you are owed. This is because of the banking Set Off rule. It means that if your account is in arrears the bank can use the compensation they owe you to pay off their debt.

Your arrears do not have to be on the same account as the one you claim for PPI against. The Set Off Rule can be used to repay any account in your name with the same bank which is in arrears.

If your account is in arrears it is of course still well worth while making PPI claims. Any compensation paid will reduce the balance you owe meaning you will be debt free sooner.

Can you keep your PPI Compensation if you are in a DMP?

If you are in a Debt Management Plan (DMP) your creditors have agreed to accept reduced payments towards your debts. However despite this agreement your account is still in arrears.

In these circumstances you can make claims for PPI compensation. However the Set Off Rule is still likely to be used. As such any cash you are awarded will be used to pay off the debt you owe.

It has been argued that this practise is unfair. You may have other more important debts that you need to pay. However the bank can not be penalised for having agreed reduced payments with you.

A DMP can last for a long time. As such making PPI claims against the debts in the Plan can really help you. Any compensation paid will significantly reduce its duration.

What if you have already settled your debt?

You may have previously been in a DMP but now your debt has been paid in full. In these circumstances any PPI compensation awarded will be yours to do with what you like.

However what if you settled your Plan early with a lump sum payment? In these circumstances the bank may still argue they can use your compensation for Set Off. This is because the remainder of the debt still exists.

You may be able to fight this if you have a written acceptance of your settlement offer stating the remainder of the debt will be written off. In these circumstances there is no longer a debt to Set Off against.

Statute Barred Debt and PPI Compensation

If you have made no payment towards an outstanding debt for 6 years it may have become Statute Barred. This means the debt can no longer be legally enforced by the creditor.

You no longer have to pay this debt. As such you may think that if you claim for PPI against it any compensation awarded will be paid to you. This is not the case. It will be used to Set Off against the debt

Although you are no longer legally required to pay the outstanding balance it is not written off. The debt still exists. The creditor can therefore use any funds of yours they are holding such as PPI to Set Off against it.

It is unwise to claim for PPI against Statute Barred debt. Any funds awarded will be used to Set Off against the balance. The claim might also be an acknowledgement of the debt and mean it becomes enforceable again.

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52 thoughts on “Can a bank use my PPI compensation to pay off debt?

  1. Paul says:

    Apologies if this is a stupid question. If the lender has agreed a settlement figure, and this has been paid, can they still apply the set-off rule. I ask because Nationwide have previously agreed settlement and taken payment for my partners debt. Now, after being judged at fault for PPI misselling they want to off-set. I had an IVA then won a PPI claim against HSBC. They did not try to apply this rule. I hope someone can answer this for me.

    1. Hi Paul

      This is actually a very interesting question. If the creditor has agreed to accept a payment in full and final settlement of the debt they are owed then I would argue they cannot then hold back PPI for further set-off. At the end of the day how can you set-off against a debt which by their own admission no longer exists. I would suggest you have a strong case to argue here. If you feel you would like any help with it please do get in touch.

  2. KemZ says:

    My loan is 10 years old I got awarded ppi and they used it to pay off my loan I was on default and they hadn’t asked for a payment I had so many other debts to worry about I thought the debt had been over 6 years old and the company folded that they couldn’t do that is it worth challenging?
    Any advise please I’m still in bad debt and the2k can pay off priorities

    1. Hi KemZ

      If I understand you correctly you believed that this loan was statute barred because you had not made payments towards it for more than 6 years. If this is the case then the debt is statute barred as long as no CCJ has been issued against you in the mean time. As such legal action cannot be taken to enforce it. However this does not mean that the balance has been written off. The debt itself still exists. It is just that it is not enforceable. Given this if you claimed for PPI then the loan company are within their rights to keep any compensation they owe you and off set it against the balance.

      If you are still struggling with your debts please do give me a call (use the 0800 number at the top of the page). I would be happy to give you more advice about the best way to manage the problem.

  3. Don Wilson says:

    My query is this….for example ……. if a person has been paid £3500 compensation on a Balance of £5800 and in the ‘settlement letter’ the Bank states that your Balance WITHOUT PPI would have been £2500 – they pay the Compensation of £3500 BUT your NEW Balance £5800 !!

    The Bank’s argument is that IF they reduced your balance AFTER paying you Compensation then THEY would be paying YOU Compensation TWICE!!! …… So….. your new ‘repayments’ on the Loan is basically paying back the Compensation that THEY paid to you! How can this be putting you back in ‘the position’ you were if PPI was not (illegally) added to your original loan. I paid 47 payments off a loan of £6000 at £132.00 per month (£6204) and after receiving £3700 ‘compensation……….. my balance was almost £5000 !!

    1. Hi Don

      This does seem strange. All I can suggest is you request the bank to issue you a statement showing exactly what the original loan was and the interest charge on the loan itself. Then it stands to reason that the outstanding balance should be this total less the payments you have paid less the PPI refund now received. If it is not then you do deserve an explanation from the bank.

  4. Scot Pound says:

    I have recently been awarded thousands by my creditor but I still need to sign that I accepted the offer and I’m a little hesitant, I defaulted payments in 2003 when I suffered a serious head injury and when I contacted my creditor they failed to even advise me of any PPI I had in place, instead I was left worried and depressed about debt while going through a medical recovery. 13 years later I’m worried that they will just use that money to pay off my debt and as they failed to provide insurance cover when I needed it, I disagree with that. Do I have any grounds for appeal if they do this?

    1. Hi Scot

      In terms of the set off rule I believe the bank can still hold back any money they now award you for PPI and use this to pay off the balance you still owe them. The debt itself is probably already statute barred. However even after this happens it is not written off. Although legal action cannot be taken against you to collect the debt still exists. As such in theory the bank can retain any compensation they now owe you and use it to set off against this old debt. As to the question about whether you can appeal against the bank if they do this unfortunately I cannot advise you. You would need to speak to your local CAB or a solicitor to get an answer on that.

  5. Sammi says:

    Hi , random question like others if I have debts with banks store cards and black horse I was in a payment agreements till I lost my job and just stopped paying I still have the car black horse have never written or chased me however if I’m not wrong I think a few of my cards and Lloyds loan and possibly black horse loan have been sold to agencies I have received several letters referring to money owed now payable to these agencies. If I claimed ppi would I receive the funds given that these original lenders have been paid when the debts were sold and it’s up to these other companies to now chase me ?

    Also is it possible to claim gap insurance bsvk and how far can I claim I was 18 cocky and stubborn strolled into a showroom n bought a car for just over 8grans I had no recorded job at the time I was cash in hand and a student yetvlssed checks to get the car no deposit was required I just wanted the keys the small print didn’t matter it was with black horse I paid extortionate extras like gap and all sorts and the total amount I was to repay was nearly 15,000 however this was all in 2007 wondered what weight it would hold on Amy claims

    1. Hi Sammi

      If your debts have been sold to debt purchasers then yes you can make PPI claims against the original loan companies and yes they should pay you any money you are owed. Given they have sold on the debt they are no longer allowed to use money they owe you to offset against their original debt as they no longer have any debt to collect against. As such if they owe you PPI compensation they should pay it to you. I would go ahead and make your claims.

      In answer to your question about gap insurance I am not sure about this. You may be able to claim against the car finance company for mis selling but you would probably need to take specialist advice. I suggest you speak to a company called Claims Guide about this.

  6. Cheri says:

    My husband and I had a loan around 10 years ago which we fell in to arrears with as he was made redundant. It was passed to a debt management company with the interest and total cost of PPI for the full term of the loan lumped on top. I successfully pursued a PPI claim with the original lender who sent a cheque to the DM company to reduce the balance. This was just for the PPI payments we had made. We are now in conversations with the debt management company to settle the balance. Our question to them (that they seem to be struggling to answer) is why are we expected to pay the balance of the loan PLUS the cost of the PPI policy when the original loan company have already admitted was wrongly sold to us? We have asked them to remove this cost before we agree to settle the balance. Are we in the right?

    1. Hi Cheri

      I would agree. PPI compensation is paid in order to put you back in the same position financially as if you had never paid for the insurance in the first place. As such the bank should now have deducted from your current balance any amount added to the original loan because of the PPI. If you believe this has not happened you need to contact the bank directly and ask them to send you a new recalculated balance. Your DM company should then use this revised balance as the basis for a settlement.

  7. Rita says:

    Hi, think2claim applied on our behalf for ppi with bank of scotland. My husband asked if we coud get cheque, they confirmed yes and it would be sent to us. On three seperate occasions my husband was advised cheque was in post and confirmed it was sent second class and my husband asked them to confirm the address it was sent to and they confirmed our address. After nearly Two wweks they then confirmed it had been offset against outstanding debt. My husband has just started new job and we are financially struggling, surely the bank can’t give you false information like this. They confirm all calls are recorded. So they will have recorded calls confirming cheques sent.

    1. Hi Rita

      The bank are within their rights to use your PPI compensation to set off against the debt you owe them. The way they have communicated with you is clearly unprofessional. However unfortunately I do not think there is very much you can do about it. I understand you are struggling but at least your overall debt with BoS has gone down. I think you should speak to think2claim who really should have warned you about the right of set off.

  8. Mick Turnbull says:

    Nothing has been mentioned here about a DRO. The rules for a DRO are completely different to all other forms of insolvency and PPI cannot be used to offset the debt after a DRO has finished,but the FOS will try to tell you different. They are wrong,for the simple reason that a DRO debt is non existent after the one year it is operating for. It is not statute barred,but completely gone and it is for this reason that it cannot be recovered.If any company attempts to recover the cancelled debt,then they are actually breaking the law. So if you have a DRO do not ask for or accept unsolicited offers of PPI,as it is probably a scam to get your DRO cancelled.

    1. Hi there Mick

      You raise an important point about the DRO solution (Debt Relief Order). You are right when you point out that after discharge from a DRO the creditors can no longer chase the individual for the debts owed. The debts are discharged and can no longer be collected. However this does not mean that PPI compensation claimed after a DRO will be paid to the individual.

      In fact the rules in this situation are the same as bankruptcy. Any compensation paid as a result of PPI which was mis sold prior to the start date of the DRO is considered an after aquired asset of the DRO (in the same was as it would be had the individual gone bankrupt). As such it must be paid directly to the Official Receiver even after the DRO is finished and discharged. As such there is really no benefit in claiming for PPI after a DRO.

      To make matters increasingly complicated if such a claim was made and any compensation due turned out to be more than £1000 there is then a question as to whether this would invalidate the whole DRO. As far as I am aware there has never been a court case which has considered this question and so currently it remains unanswered. However given this uncertainty my advice is simply do not claim for PPI after you have been discharged from a DRO.

  9. Tina says:

    I have applied for ppi n been told I have a claim! I am with a dmp but think my debt was sold on so do I still get the payment? I’m going through a agency so will they take a payment out first before it comes to me or to dmp? How long does my claim take to sort out?

    1. Hi there Tina,

      As far as I am aware the bank cannot withhold PPI compensation to set off against a debt which has been sold. This is because they are no longer owed the money. The debt purchasor is the new legal owner. Given this the bank has nothing to set off against and should pay out the money awarded. In terms of how long it will take the bank to review the claim and pay out this will vary. It is normally between 2-3 months from the point a claim is submitted but could be quicker.

  10. Tina says:

    Thankyou for your help!

  11. Jo says:

    Hi…I have recently made a claim for PPI through The Claims Guys. The complaint was upheld and I have been awarded £4500. However, I have been informed that the money will be offset towards the debt with the bank. I feel this is fair so have no argument with that but have just received a letter from the Claims Guys asking for immediate paymemt of their fee of £1650 which I do not have.
    I was unaware that the bank would use the money to offset the debt, or of the extent of the fees involved. I cannot pay the fee as I cannot afford it. Can The Claims Guys get their fee from the offset money from the bank? Feedback would be much appreciated, thank you

    1. Hi Jo

      I assume you have debt outstanding with the bank which is in arrears? If so then it is quite legitimate for the bank to withhold the compensation due and use it to off set against the debt. I would check the terms and conditions of the contract you signed with the Claims Guys to see what it says in this situation. However I certainly feel you should speak to them and say that this scenario was not properly explained to you when you signed up with them. On this basis you should demand that they cancel their fee. If they refuse your only option is to raise a complaint against them I am afraid.

  12. Craig says:

    I’m in dmp my debts have been sold on to other companies I have claimed ppi if I receive anything can I use this to pay of debts or do I have to give the companies my compensation?

    1. Hi Craig

      Your question is very similar to that of Tina’s (above). You will need to make your claims against the original banks who sold you the PPI. They should pay you any compensartion due. They cannot withhold it claiming the reason is set off because they no longer have a debt with you to set off against. The companies that bought the debt have no legal claim on any windfall you receive. As such you can decide to do whatever you want with any money you receive. Of course given you are in a DMP a good idea might be to use it to settle the outstanding amounts you owe.

  13. Patricia says:

    I had a credit card with Lloyds I went into default and since taken to court for repayments CCJ which I’ve been paying off monthly .
    I recently claimed PPI back on that account and the claim was successful, do I still have to pay the CCJ for this account or can I appeal it after the fact seeing as Lloyds misspelling was the reason I defaulted on the account and accrued the debt ?
    Do I need to contact Lloyds and ask them to withdraw the claim or go I have to go through the courts ?

    1. Hi Patricia

      This is an interesting question. I think you have a strong claim that the CCJ should never have been issued. It stands to reason that you would not have been struggling with the debt had you not been mis sold the PPI in the first place. We are not solicitors here so I cannot be certain what the outcome will be. However I do not think there is any harm in you writing to Lloyds and asking them to withdraw the CCJ. You should state that the purpose of them paying you PPI compensation was to put you back in the position you would have been in had you never been sold the PPI. Clearly overturning the CCJ must be part of that. Let us know how you get on.

  14. Nicky says:

    Hi, I have made a claim against Barclays which has been upheld. My question is I went into default and paid back through a dmp. During this time my interest was reduced. I have now paid back all that was due. In the last 2 months of finishing the debt Barclays sold it on (didn’t really make sense at the time). Now that it is all paid will I be expected to pay for the reduced interest with any of my compensation?

    1. Hi Nicky

      As far as I am aware if the debt is paid in full I can see no reason by Barclays could withhold any PPI compensation you are now due. Notwithstanding that you subsequently paid it, the fact that the debt was sold on also confirms nothing further is owed to Barclays. You should not have a problem.

  15. Jane chenery says:

    Can anyone help please? I claimed ppi on several Yorkshire and bank loans and was duly paid out with complaints upheld. The last loan is defaulted on in 2010 and Ian we sold on. I had no contact about this loan in last 71/2years neither written or verbal. Suddenly I’m being chased by debt company that loan was sold too. I have written to debt company and told them the debt is statute barred. The they wrote back and said iIwould not hear from them again but the bank are now wanting the debt back. The can they enforce it if it is statute barred a d iIhave used the money to pay off other debts?

    1. Hi Jane

      It does look to me as though the debt is statute barred. As such it can no longer be enforced. The debt purchasing company have no right to try and collect from you and it is quite right for them to have said they will not contact you again.

      In terms of the original bank given they sold the debt they have no more debt to collect. It is not now their debt to enforce and they cannot take further action against you. As such if they are asking you to pay back the PPI they paid you for some reason I cannot see how they have any right to do this. Having said that we are not solicitors here so you might want to double check this with a legal representative at your local CAB.

  16. Julie says:

    I had a loan with welcome finance years ago.. This debt was sold to a debt collection agency.. It has been at least 10 years since the loan was taken out and after speaking to the debt collection agency they have confirmed the debt is actually statue barred and no further action. My Question is could i claim back PPI on the loan from the original creditor? Thanks

    1. Hi Julie

      There is nothing to stop you making a claim for PPI against a statute barred debt. However even though it is statute barred and unenforceable it remains outstanding. As such the bank is within their rights to hold back any PPI compensation which may be awarded and use it to offset against the debt still outstanding. As such my recommendation in these circumstances is normally that there is little point in making a claim and you are better off letting sleeping dogs lie.

  17. John says:

    Hi there,

    I had an account with Lloyd’s 16yrs ago at which time they asked me to go in for a meeting and subsequently I was offered a loan and a gold account and other things which I can’t remember exactly but I ended up going with it all and got into trouble when I lost my job I got into arrears, approached an IVA company but ended up not doing it, however Lloyd’s never contacted me after that and I think is statute barred., no CCJs ever recorded against me. Then about 8 or 9 yrs later (2010 approx) I got into financial trouble again and eventually entered into an IVA(not including my old Lloyd’s debts). The IVA was completed early subject to a final settlement sum which was paid and accepted by the creditors. My completion date was in May 2016. I have the certificate and have applied for a ‘letter of no interest’ from the IVA Provider.
    Is it worth me putting in a claim for PPI with either Lloyd’s or the creditors involved in the IVA?.
    Thanks, John.

    1. Hi John

      If a debt is statute barred it means that it is no longer enforceable and you cannot be made to pay it. However the debt itself still exists. As such if you make a claim for PPI against this debt Lloyds would be well within their rights to hold back any compensation you are awarded to off set against the original debt you owed. Given this I would not recommend claiming against this debt in any event.

      In terms of the debts that were included in your IVA as you say you first need to get a “letter fo no interest” from the IVA company who manageded your Arrangement. If they provide this to you then there is nothing to stop you making your claims against these creditors. In theory you could do this yourself. However I would still recommend using a specialist claims management company to help you to overcome any ongoing barriers that the banks may put up.

  18. Richard says:

    Hi. I have a situation where i had a joint loan with my mother in 2003. This loan was settled in 2005. A claim for PPI has been successful. My Mother has a payment arrangement for another debt with the same bank. Will they pay the full claim to us as the loan with the ppi has been settled.

    1. Hi Richard

      If the loan was in joint names then any PPI compensation payable should be split 50/50 between the named account holders. As such 50% of the money should be sent to you with no problem. However the bank can hold back your Mother’s 50% and use this to off set against the debt she still owes them. They are fully within their rights to use any money they owe her to pay a debt she still owes them given it is in arrears. It does not matter that the account is different to the one associated with the PPI compensation payment.

  19. Tony m says:

    I have only 3 more payments to make on my IVA, I have recently received a letter from one of the banks that are just so happens listed as one of the companies on my IVA, I was originally told I wasn’t entitled to ppi compensation but now this letter is stating that due to a Supreme Court decision I can claim back any excessive commission they earned on the ppi , they also stated on the letter that the money would only be paid into my account, but they need the Iva company to send them confirmation that I can pursue this claim along with my Iva agreement , my question is if they will only pay it into my account then why do they need my agreement and to basically say yes I can pursue the claim??

    1. Hi Tony

      If you receive a windfall while you are in an IVA it must be paid into the arrangement. PPI compensation is a windfall. As such if you claim before you have your completion certificate any money you received will have to be paid into the Arrangement and you will not benefit at all.

      Once you have finished your IVA and you have your completion certificate it might then be possible to claim for PPI and keep any compensation paid. However you will first have to get a letter from your IVA company confirming that they have no further interest in any PPI subsequently claimed and paid. This is what the bank needs to see. If your IVA company will not give you this you can still go ahead and claim but it will be 99% certain that the bank will pay any compensation to your old IVA company and not to you.

  20. Robert says:

    If a bank sells my debt on can they still persue me if I win a ppi claim?

    1. Hi Robert

      You are asking the same question as Tina (above). As far as I am aware the bank cannot withhold PPI compensation to set off against a debt which has been sold. This is because they are no longer owed the money. The debt purchaser is the new legal owner. Given this the bank has nothing to set off against and should pay to you any PPI compensation they now award.

      Having said that I have recently heard of a bank which attempted to pay the compensation awarded to the debt purchasor. I believe that action is not legal and the money should come to you.

  21. Tess says:

    I defaulted on my tsb loan in 2011 but I still paid them what I was able to afford each month (much less than what the monthly loan repayment plan was). Tsb then sold my debt on to caboot. Then at Xmas I received letter from Lloyds saying they was buying the debt back and not to make any further payments.

    I have now been told by lloyds that they have now written off my debt. What i would like to know is if I make a claim for PPI will they use it to pay towards the debt they have written off?

    1. Hi Tess

      If the bank has bought back the debt even though they have told you it has now been written off as far as I am aware this means they are not going to enforce it. However I believe that legally speaking it is still owed and the right of set off will apply. As such they would be within their rights to hold back any PPI compensation they owe you to set off against the original debt.

      That said the only way you will find out for sure is to make a claim and see what happens. At the end of the day it would not hurt to do this. You never know you might be paid any compensation due.

  22. SKE says:


    After two years of making token payments towards our debts with RBS we have finally come to an agreement that will (hopefully) conclude matters. RBS have accepted offers we have made in partial settlement of the debts. The debts will be shown as partially settled on our credit file and they will not pursue the remaining outstanding balances.

    We have also been offered PPI refunds from RBS. The PPI team said they would use their right to off-set any debts we have outstanding with RBS Group. Does this mean that, even though our settlement agreement states RBS will not pursue the remaining outstanding debt, the PPI refund proceeds could still be used to off-set it?

    1. Hi Ske

      Sorry to be the bearer of bad news but I am afraid that RBS will certainly hold back any PPI compensation you are awarded and use this to off set against the debt you do not repay.

      The terms of your settlement agreement with them says they will not pursue you for the remaining debt. This means that they will cease all further collection activity against you. However if the money “falls into their hands” without having to enforce collection (as would be the case with PPI compensation) they are certainly within their rights to hold it back for set off. I would be very surprised if they did not do this.

      1. SKE says:

        Thank you for your prompt reply James.

        If using the PPI proceeds to set-off the debt leaves us in financial hardship, is it concieveable that RBS would agree to not set-off?

        1. RBS could always use their discression to give you some or all of the money Ske. However whether they will or not I am not sure. If pressed I would say that it is unlikely but you can but try…..

  23. Andy says:

    I know there is questions and replys about this but im still struggling to understand it. I had numerous loans with the natwest (8 or 9 with ppi) over the years but my last one i defaulted on in dec 2008 (no ppi on this one).

    I spent a year away in a HMP and when i came out my debt had been given to a debt collecting agency. I sorted out a payment plan and after 2 years i offered a settlement below what i owed. They where happy to accept .

    I went through the claims guys this year and won on the loans with ppi (just sent declaration letters last week). So will the money come to me / debt collecting agent or will bank try and keep it? Claims guys want £1000 and keep ringing to see if i have been paid yet.

    1. Hi Andy

      Your situation seems very similar to that of Paul’s (posted in April 16 above). As I said then it is my belief that if your creditor agreed to accept an amount to settle a debt they cannot now argue that they are still owed money. Why? Because they wrote the outstanding amount off as part of the settlement deal.

      Given this they should not be able to retain any of your PPI compensation to set off against this debt. It does not seem logical that they can set off against a debt that they are no longer owed.

      However I must stress that this is my personal view. We are not solicitors here. If the bank does hold back any of your money and you want to try to argue it you would need to get legal advice.

      1. Andy says:

        Thank u for the reply james. There is nothing about it on my credit score plus i have the original letter from the debt collecting agency (who where a solicitors) telling me they are happy with the settlement and classed the case as closed. Its just a waiting game now hopefully with a positive outcome but knowing banks im sure there will be a sting in the tail .again thanks for the reply

  24. Pauline says:


    In 2006 l had several credit cards and a tesco loan. I was taken ill in the October and the loan was paid by the insurance company for 12 mths, l did not make any more payments to Tesco but do know that the loan was sold on. The credit cards where never paid from oct 2006 and where also sold on. I was not able to go back to work for over 5 years. Would it be worth making a claim

    1. Hi Pauline

      As I have stated in previous responses above I believe that you can make PPI claims against an original creditor if they have already sold the debt on and they should pay any compensation due to you. However I am now hearing of cases popping up where the loan companies are saying any compensation paid should go to the new owner of the debt (the debt purchasor such as Arrow Global) and not you.

      Unfortunately we are not solicitors here so I am not sure exactly how this is viewed in law and whether there is a legal precident. At the end of the day there is nothing to stop you making claims to see what happens. However it is not 100% certain the compensation will come to you.

  25. Dianne says:

    I have been told I have a PPI claim. The bank has contacted the collections agency as the loan was defaulted and told them we have money coming. We have been paying off this loan since 2004 and have not defaulted in the payment. Is it fair just to offer £1000 and keep the balance for ourselves or will the collections agency make trouble if we don’t give them it all.

    1. Hi Dianne

      Given you are paying your debt through a collections agency I assume you must have defaulted against it in the past. As such if the bank now awards you PPI compensation they are likely to hold back the whole amount and use this to off set against the balance of the debt you owe. This is the case whether you have defaulted on the payment plan you agreed with the collection agency or not.

      As such it may be that you will never get your hands on this money. Where this is the case there is nothing you can do but at least the balance of the debt you owe will go down.

      If the bank chooses not to off set and pays the compensation to you then you can do whatever you like with the money. You do not have to pay it to the collections agency. However an option you could consider is using it to offer a lump sum to settle the debt once and for all. Generally speaking you would need to offer 50% of the balance to get the collections agency to accept this.

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