Bankruptcy and PPI Claims

Both bankruptcy and banking start with the letter b. And both, can have very unpleasant consequences for your head after a punch, including financial ones as well. The loss of orientation while you are in the financial knockdown can be one of the worst for you to experience during bankruptcy. You need to remain calm and think straight which can be very difficult in a situation where your credit cards, debts, and a mortgage are giving you punch after a punch. One of the things, that strongly contributes to your feeling of losing the orientation is undoubtedly the issue about PPI claims.

Just like a drowning man will try everything in the hour of need including clutching at a straw, a man under bankruptcy will try to use even the smallest chance for saving or obtaining money regardless of the amount. We are literally being bombarded with the information and advertisement about the PPI or Payment Protection Insurance. However, if you scratch the surface, you will soon realize that finding a man who actually knows what PPI means can be a challenging task, not to mention knowledge about what is happening with PPI after bankruptcy. For these reasons, the situation with the PPi in bankruptcy deserves a clarification. The reliable and conformed information is the strongest ally you can possibly have on your side in bankruptcy.

Payment Protection Insurance

PPI stands for the Payment Protection Insurance. PPI is the very specific form of insurance policy designed with the primary purpose to keep your credit and debt payments alive in cases when you cannot follow your financial obligations for various reasons. It may be easy to define PPI, but not what is happening with it afterwards. Although you are buying this policy its financial benefits are not intended for you, but for someone else – your creditor. In addition, your certainty about the successfulness of your PPI claim can be seriously threatened by its mis sold status. In certain cases the amounts related to the PPI claims can be tens of thousands of pounds worth.

PPI Claims in Bankruptcy

When it comes to the PPI claims when bankruptcy occurs, the rules are clear despite what you may think of it. In case, when the PPI policy precedes the bankruptcy order all of the refunding amounts are under the control of the trustee or Official Receiver. Even the fact that the bankruptcy is discharged will not change this situation. Additionally, in case that the bankrupt had success with the PPI claim for the whole amount or certain part the trustee or Official Receiver are entitled to ask for it. Therefore it is more than wise to talk to your trustee or Official Receiver prior to the initiating of the PPI claim.

We have to emphasize that this question is not simple as it may seem from the previous rules. We simply cannot avoid the existence of one very obvious and logical controversy. One of the most important consequences of the bankruptcy is the writing off the debts. In addition, there should be no debts to pay for after the bankruptcy discharge occurs. Now, after we have said this the PPI claim just does not make any sense. You have to base the PPI claim on a certain debt, don’t you? However, the debt issue had already been solved by the bankruptcy itself. This is just like asking for a piece of a chocolate when there is nothing left in the nice ambalage. This is not where the controversy ends. The financial institution behind the PPI claim may even decide to transfer the benefits of the successful claim directly to the trustee or Official receiver.

Then, what to do when you are in the financial knockdown and the counting has already started? Well, ask for an advice from boxing referee, what else. The insolvency service strongly suggests you to always contact your trustee or Official Receiver whatever you may decide. If you had already initiated the PPI claim inform your trustee or Official Receiver as soon as possible. If you are still thinking what to do about your potential PPI claim, it would be wise to consult with them again. While boxing with bankruptcy it is more than necessary for you to know where is the exact location of your opponent. Additionally, you already know that is not recommended to hit the boxing referee instead of your opponent. Rather use brain muscles and do not make your complex situation being even more difficult. The last thing you need in the bankruptcy is to create more debts while trying to solve the debt issue. Always think and ask twice for everything you plan to do during and after your bankruptcy.

Andy Gorton is the author and editor of the Bankruptcy Clinic

Andy Gorton – who has written posts on Bankruptcy Clinic Blog.

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