Claiming PPI and debt
The recession that hit hard and fast in 2008 left many people struggling financially. From falling behind with mortgage and rent payments, to defaulting on loans, credit cards and so on.
When this happens, the effects on your credit rating can be devastating and long term. It also places people in a place of doubt, where they assume that they will not be able to gain credit at a great rate and so on.
It also places some people in doubt as to whether they can make a claim for mis-sold payment protection insurance (PPI) and, if their claim was successful what happens to the cash.
You CAN claim PPI compensation
If you are in debt or arrears with a bank or lender, you still have the same rights as all other customers; if PPI was mis-sold to you, you can claim your money back.
In fact, it is probably the PPI policy that contributed to your debt spiralling out of control in the first place. PPI was an expensive policy, with interest being calculated on the amount you borrowed plus the cost of the PPI. This turned an affordable loan into one that many people struggled to pay.
Will the money be mine?
Many people assume that because they are in debt, when a PPI compensation sum is awarded to them, they will not see a penny of it. This is not quite the case...
If you are in arrears with your loan e.g. behind with repayments, your bank or lender may take a slice of the PPI compensation to bring your account up to dat. They cannot offset your PPI compensation claim against the whole amount.
It is up to you whether you choose to pay off the loan, or to carry on paying a monthly amount. Your lender cannot make this decision for you.
PPI claims and IVAs
An IVA in an Individual Voluntary Agreement that brings all your outstanding loans together. A company will administer a monthly payment from you, disseminating this throughout your creditors. If you do have an IVA arrangement and make a successful claim for PPI compensation, you will need to notify the company looking after your IVA. You may find that all or part of it is subsumed into the agreement.
Lost money or a fresh start?
Some people are disappointed that they may make a successful claim for PPI, only to find that their IVA or bankruptcy arrangement takes a large slice – or all of it! But, there is another way of looking at this: PPI compensation could be the windfall that places you back on your feet, financially, wiping all the debts and chasing creditors.
Claiming PPI compensation when you are in debt can be more complex thus, you need a reputable claim management company to help you. Call Payment Protection Scotland today for a no obligation chat!