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Are PPI claims possible during an IVA?

If you have paid for payment protection insurance (which you believe to have been mis-sold) you could be entitled to make a claim against the lender for compensation. In this article we discuss reclaiming PPI whilst bound by the terms of an IVA (Individual Voluntary Arrangement).

Whether you are in an IVA or not, if you consider you have been mis-sold PPI then you are entitled to make a claim for a refund. If you are considering using a claims management company you should do so with caution. A recent investigation into claims management companies by the consumer organisation ‘Which?’ has found that some of these companies have been offering misleading advice and often lack transparency. Many such companies charge 30% of the total pay-out in return for managing your claim.

The claims industry is regulated by the Ministry Of Justice which sets out standards and rules for those involved in claims management. It is clear that many claims management companies are not following the rules. ‘Which?’ phoned 25 companies pretending to be potential clients only to receive some very misleading advice. The chances of success were sometimes being exaggerated, the fee structure was not made clear and the fact that the client can make a claim themselves without professional assistance was often not discussed.

Richard Lloyd, ‘Which?’ executive director, said: “Claims management companies need to clean up their act. Consumers are being misled about their chances of success and how much they will pay”. This is obviously the last thing people need if they’ve already fallen victim to the PPI mis-selling scandal and are under the terms of an IVA.

Some claims companies were charging an upfront fee just for accepting the case. It is simply not necessary to use one of these companies, you can make a claim for PPI yourself and it is relatively straight forward with simple template letters available online. If you are currently in an IVA we would advise against using a claims company because of the reasons already explained. Ironically a PPI claim may worsen your position if you are charged a success fee as proceeds of the claim are withheld (set-off) or paid directly into your IVA.

If you are in an IVA then you will not be paying towards credit cards or loans but will instead be paying monthly payments into the IVA. If you mount a successful PPI claim any compensation you receive will be classed as a windfall and paid towards the IVA for the benefit of your creditors.

An argument does exist that making a PPI claim whilst in an IVA will not benefit an individual personally. However, if you feel strongly that you have been mis-sold to then there is no harm in pursuing a PPI claim whilst in an IVA, as long as you realise you are unlikely to benefit from it personally (unless the pay-out would clear your debts and bring the IVA to an early end). You will also gain the satisfaction that the mis-selling lender has not benefitted from their actions.

Any windfalls you receive after your IVA has been completed will be yours to benefit from, so you could consider starting a PPI claim after successful completion of your IVA. So long as you did not know you would get compensation at the time your IVA was in place the compensation will be yours. You should be aware however that any creditor that has written off debt as part of your IVA may be obstructive in making a PPI pay-out on the same accounts where write-off has taken place. In some cases you may be claiming money you did not fully pay.

Before commencing your PPI claim it is advised you discuss your plans with your IVA company or IVA supervisor to ensure they are aware of your intentions. Their advice should be followed before making a decision whether or not to make a PPI claim.

If you require any further assistance then here at the IVA Advice Forum we are on hand to offer the advice and support you need. Call our advice line on 0800 043 7206 today.

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