Arrears and Debt – Can You Still Claim PPI Compensation?

With the announcement of a firm PPI deadline expected from the Financial Conduct Authority (FCA) in the coming months, many people have many questions left unanswered.

We field many fields regarding arrears on accounts and debt in relation to PPI compensation claims. Here we summarise some of the most common experiences we have come across in relation to people claiming PPI compensation whilst dealing with debt and arrear issues.

Can You Still Claim PPI Compensation if Your Account is in Arrears?

Yes, you can. For some people, the reason why they are in arrears on their accounts is because of PPI. The reasons are two-fold:

• Cost – PPI was expensive of the little cover that it offered. Not only that, the cost of the policy was not always clearly explained therefore pushing people’s finances to breaking point. As many customers assumed they had to have PPI (this is not the case), they thought they couldn’t cancel it and struggled on with payments.
• Terms and Conditions not being made clear at the time of purchase – we have known customers attempt to claim on their PPI policy when they were made redundant but were told they ‘had to wait six months before they could claim’. Because of a dip in income, many people got behind with payments on accounts, resulting in arrears and thus a poor credit rating.

Do I Get to Keep the Money?

If you make a claim for compensation for mis-sold PPI, you could be awarded a heap of compensation. Many people want to know, do they get to keep this money or can the lender do what they think is right with it?

If you are in arrears on your account, your lender could use the money to ‘wipe off’ the outstanding amount. BUT, they will need to calculate how much of these arrears are outstanding payments and how much relates to PPI payments.

Or, they may send you the money direct followed by the arrears amount and ask for payment.

What About More Complex Debts?

For those customers with IVAs and in the process or have undergone sequestration or bankruptcy, what happens with any PPI compensation depends on many factors.

As each case is different, it is a wise move to have a no-obligation chat with our specialist teams. In the main, however, PPI compensation is classed as a financial windfall and, as such, you should declare the case to your administrators or whoever is handling your debt payments.

You can claim PPI compensation if the PPI policy was mis-sold and if you are in debt and/or arrears with your lender. With nothing stopping you, what’s stopping you from calling Payment Protection Scotland?

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