IVAs and PPI

PPI mis-selling claims relate to Payment Protection Insurance that a Creditor may have mis-sold you whilst you had an agreement with them.

You may not have known you were paying this insurance within your agreement, which is why it could have been mis-sold to you. If you didn’t agree to this insurance, you have the right to claim this money back.

Is PPI compensation considered a windfall in an IVA?

No, PPI compensation is not considered a windfall. In most IVA proposals, it’s actually classed as an asset and this is why the full amount has to be paid into your IVA arrangement.

What if the PPI claim is for a debt that isn’t in my IVA?

Whether the debt was included in your IVA arrangement or not, it’s still classed as an asset. If your IVA is still in place, every PPI compensation pay out must always be paid in full into it.

No, but if your Insolvency Practitioner thinks you were mis-sold PPI they can ask that this is checked and have the compensation paid directly into the arrangement.

Please bear in mind that if you don’t help with their requests for PPI compensation, this could potentially delay the completion of your IVA.

What if my IVA has been completed?

It is important to check your IVA proposal and terms and conditions. PPI compensation may have to be paid into your arrangement even if it is completed – if the PPI is for a debt that was prior to your IVA starting.

This may seem unfair if you’ve received a completion certificate. However, the IVA proposals may still give your Supervisor the right to collect and distribute assets included in your IVA, even though your IVA is completed.

What should I do if I think I’ve been mis-sold PPI and I am in an IVA?

First, let your Insolvency Practitioner know, if you think you’re entitled to PPI compensation. You will then need to make the claim for it.

You can do this yourself, and all the compensation received will be paid to your IVA.

If you don’t want to claim PPI compensation yourself, you could ask a Claims Management Company.

If you decide to use a claims service, you will need to check that any fees for their services are taken from the PPI compensation. This means you will not have to find the money to pay them, which could cause further debt problems.

We know that receiving this money to spend for everyday expenses may be preferred, but if it is a big enough pay out it could really benefit your IVA and in some cases even reduce the length of the arrangement!

IVAs and PPIs can feel complicated, but as long as you disclose all the potential PPI compensation you know of to your Insolvency Practitioner there should be no issues. Talk to the team at PayPlan today for free debt advice.

FAQs

What if I become seriously ill?

Please contact us as soon as possible. We know these conversations can feel difficult – but you’re not alone, and our dedicated Vulnerability Team is here to support you with care and practical guidance.

Your Insolvency Practitioner (IP) may speak to your creditors and request early completion of your IVA on compassionate grounds.

What happens if I come into money during my IVA?

If you receive a financial windfall – such as inheritance, compensation or lottery winnings – you’ll usually need to pay all of it into your IVA.

Because your creditors have agreed to write off part of your debt at the end of your IVA, any extra funds must be considered.

If the amount’s large, you may be able to offer an early Full and Final settlement.

If friends or family want to help with a lump sum, creditors may accept it as a settlement offer. It doesn’t have to cover everything you owe, but it must be fair and reasonable.

Can I settle my IVA early?

Yes – you can ask to offer a lump sum as a Full and Final settlement.

Your creditors will vote on the offer at a Variation Meeting.
Even if accepted, your IVA stays on your credit file for six years from the original start date.
It remains on the Insolvency Register for three months after completion or termination.

Early settlement can give flexibility, but you’ll still need to rebuild your credit after it completes.

Can I add debts to my IVA?

Because an IVA is a legally binding agreement, adding new debts can be difficult.

Forgotten debts: If a debt was missed at the start, it may still be possible to add it. Sometimes a second Creditors’ Meeting is required if the debt is significant.
New debts: If you’ve taken on new borrowing since your IVA began, contact us immediately. We’ll explain your options and what this means for your arrangement.

Can an IVA affect citizenship?

Your IVA will appear on the Insolvency Register, which may be visible during a citizenship assessment. It doesn’t automatically prevent approval – and in many cases, it reflects that you’re actively managing your debts responsibly.