IVAs and Payment Protection Insurance (PPI)

PPI is 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 claim this money back.

Is PPI compensation considered a windfall in an IVA?

No, PPI compensation is not considered a windfall. 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.

Can PPI compensation be claimed without my consent?

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?

PPI compensation will still have to be paid into the 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 but this is because all assets involved with the debts in your original IVA are still due to your creditors.

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 service associated with your IVA company to make the claim for you.

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 up front, 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 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 up front there should be no issues. Talk to the team at PayPlan today for free debt advice.