Can I reclaim PPI while I'm on a Trust Deed?
PPI, or Payment Protection Insurance, is insurance that lenders sell alongside loans and credit cards. It's supposed to cover your repayments if you lose your job. Unfortunately, many people were mis-sold PPI in recent years, when they didn't want or need it, or when they couldn't even claim on it.
In some cases, PPI even made people's debt problems worse when they weren't able to repay their debts. The PPI scandal was far reaching, and most of the major banks have set aside large sums to cover the cost of repaying mis-sold policies and compensation.
Can I make a PPI claim?
If you believe you were mis-sold PPI, then you must make a claim - and any money you get back could help towards your Trust Deed.
If you come into any kind of extra money while you're on a Trust Deed, including a PPI settlement, your lenders are entitled to it.
But, a Trust Deed can still help you to avoid bankruptcy and stay in your own home without selling your assets - and it can write off unsecured debts that you cannot afford. If you're looking for debt advice in Scotland, get in touch.
Reclaiming PPI during a Trust Deed
A Trust Deed is a repayment plan in which you agree to repay as much as you can afford - normally for four years - and your unsecured lenders write off the rest upon successful completion.
PPI settlements are considered 'windfalls' while you're on a Trust Deed, just like an inheritance would be. While you're on a Trust Deed, your lenders are entitled to reclaim as much of any windfall as necessary to recoup the money you owe them.
And windfalls can help you to complete a Trust Deed successfully, sometimes bringing them to an early conclusion. Speak to one of our debt advisers if you would like to apply for a Trust Deed.
Reclaiming PPI after a Trust Deed
Once you complete a Trust Deed successfully and the rest of your unsecured debts are written off, those lenders have no claim on your future earnings or assets. So, if you made a PPI claim after you have completed a Trust Deed, you would be entitled to keep any payout to yourself (minus tax).
That doesn't mean you should wait until your Trust Deed ends before putting in a PPI claim, though. Consider that any payment you did receive could help to lower your unsecured debt and actually complete the Trust Deed successfully.
Article Updated 12/12/2013