Part of an insolvency practitioner’s duties in administering your Trust Deed is to establish eligibility to claim PPI. If they find that you’re entitled to a refund, these monies will be used to repay creditors, in addition to your normal monthly Trust Deed payments.
The same has applied to people even after they have been discharged from the Trust Deed, which means that making a claim at that point could also result in the funds being redirected elsewhere.
Previous cases have seen some banks offsetting funds from a successful claim against the remaining debt, with the debtor receiving nothing from the claim.
Several cases have been reported in Scotland where a Trust Deed has been reopened solely to capture PPI refunds. The legality of this has been questioned in some quarters, but the fact is that unless it is challenged in court, the banks are unlikely to surrender these monies if their original debt was not fully repaid under the Trust Deed.
Furthermore, communications are likely to take place between the financial institution concerned, and your Trustee/former Trustee, so you may not even be aware that your Trust Deed has been reopened for this purpose.
You will receive a letter from the Trustee confirming your discharge, generally four to six weeks after your final payment has been made. This is not the end of the matter, however. Your Trustee will also be discharged at some point, and the Trust Deed will be closed, but the timescale for this varies.
Consequently, your Trustee could still be working to recover monies on your creditors’ behalf even when you think your liabilities have been met, or officially written off. Complex cases can mean an extended time in office for the Trustee, and until they are discharged the case is not closed.
Challenging your bank’s right to claim PPI after your Trust Deed has ended is a complex and expensive process. This is a contentious issue, and until it is officially tested in court, the banks are likely to continue ‘offsetting’ PPI claim funds to meet unpaid debts.
It’s possible to check online to see if your Trust Deed has been reopened, as it will appear on the Register of Insolvencies.
To worsen the situation, in some cases the banks have sent out an offer letter with regard to PPI repayment before they check the insolvency records. So unfortunately, even if you’ve had initial contact from them, it does not always mean that you’ll receive the money.
To receive independent, unbiased advice on claiming PPI, call the team at Scotland Debt Solutions. We have offices around Scotland, and can help you decide whether making a claim would be worthwhile.
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