Payment Protection Insurance (PPI) is being reclaimed across the UK. PPI which was mis-sold can be reclaimed and financial institutions must repay consumers if they are eligible. If you need help on how to reclaim mis-sold PPI please get in touch for advice. However, many people are also wondering what will happen with PPI in a debt solution.
In some debt solutions, assets must be reviewed to determine if there is any equity. PPI is considered as an asset. Most people don't expect they will have PPI so enter debt solutions without considering the implications.
Payment Protection Insurance and Debt Problems
In some debt solutions, all of the debt is not repaid in full. These solutions include an IVA, Trust Deed (Scotland) and bankruptcy. This means the creditors receive what they can back and agree to clear the rest of the debt.
If you have not entered an insolvency solution then you can apply for your own PPI. If you are due money back then creditors will often offset this money against any debts and give you the rest of the money back. This sometimes means you can repay a percentage of the money you owe.
If you are already in a debt solution, like an IVA, Trust Deed or Bankruptcy, then you will not be allowed to apply for your own PPI. If you do apply for your PPI and receive the money back then you would be required to repay this towards your debt solution before your solution is closed.
When Can My Debt Company Take My PPI?
When anybody enters an insolvency solution they sign over their estate to a regulated insolvency specialist. The specialist will then consider the assets to determine if there is equity. If there is realisable equity over a certain limit, then the asset will have to be sold.
In an IVA, Trust Deed or Bankruptcy it's procedure to check for PPI as it would become a windfall which could be returned to the creditors. The debt solution cannot be closed until the PPI has been resolved. This process is managed by your insolvency specialist.
The same can be said for family inheritance or winning money, the windfall would go to the creditors to repay the debts. If there were to be money left over after repaying the debts and fees and charges, then you would receive this money back.