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I Have Been Discharged From Bankruptcy, Can I Claim for PPI Mis-Selling?

April 26, 2012 | Comments: 0 | Views: 399

If you have been discharged from your bankruptcy we consider whether you will receive any compensation if you make a claim for PPI mis-selling. Under normal circumstances, once your bankruptcy comes to an end and you are discharged, if you then receive a windfall perhaps in the form of an inheritance payment or a lottery win, this money will be yours to keep.

This is because these are new assets. They did not exist at the time you were bankrupt. You may think that a PPI mis-selling compensation payment from a claim made after you are discharged from bankruptcy is also a new asset and as such will also be yours to keep. However this is not the case.

PPI compensation is an unrealised asset

Any claim for mis-selling against PPI which was mis-sold to you before the date of your bankruptcy is viewed as one of your assets. It is called an unrealised asset. This is because the opportunity to make the claim and receive compensation was available at the time you were bankrupt but was simply not taken up yet. As an unrealised asset, a PPI mis-selling claim therefore remains the property of the Official Receiver. If and when a claim is made and compensation paid, this must therefore be paid to the OR and into the bankruptcy estate. This is the case even if you have already been discharged from your bankruptcy as the ownership of unrealised assets is not passed back to you after you have been discharged. This makes a compensation payment from a PPI miss-selling claim very different to a windfall received after you are discharged from bankruptcy such as a lottery win which simply did not exist at the time you were bankrupt.

What if my claim is against a bank which was not included in the bankruptcy?

It is possible that you were mis-sold PPI with a loan which you repaid in full before you were declared bankrupt. You might think that because the loan was not part of your bankruptcy and the bank concerned was not a creditor in your bankruptcy then you should be able to keep the compensation if you claim for PPI mis-selling against this loan.

However this compensation claim is treated in exactly the same way as if the debt had been part of the bankruptcy. The claim is still classed as an unrealised asset that you owned at the time you were declared bankrupt. The ownership of this asset was therefore also passed to the official receiver when you were declared bankrupt and any compensation due under it must still be paid to the OR.

Could I use a claims company to help?

Ultimately there is nothing to stop you making a claim for PPI compensation after you have been discharged from your bankruptcy. It could be argued that it is in fact your duty to do so as any payments received will be put towards the debts that were not repaid in your bankruptcy thus reducing the losses of your creditors.

However there is a problem with using a claims management company to help you make a PPI claim. The problem is that the claims management company will want to charge you a fee which is normally paid as a percentage of the compensation you are eventually awarded. Given that all the compensation you are paid will have to be given to the official receiver, you may therefore end up in debt to the claims management company for its fee which you do not have the money to pay.

As such, if for some reason you do decide to claim for PPI mis-selling after you are discharged from your bankruptcy you need to make sure you understand that you will not benefit personally from the claim. You must also make sure that you manage the claim yourself rather than using the services of a claims management company otherwise you might end up actually owing them money.

What to do next

If you are struggling with debt and are considering bankruptcy, have a look at the useful information about Bankruptcy on the BeatMyDebt.com website. Our experts are available to speak to you about the bankruptcy option and offer further help and advice. Our vibrant online debt forum gives free access to experienced industry experts and others who have suffered with debt problems and have been through the bankruptcy process themselves. Useful guides and more information is also available designed to help you understand how to manage and resolve debt problems.

James Falla is an expert debt advisor from BeatMyDebt.com. For more quality and confidential information on Bankruptcy, visit http://www.beatmydebt.com/bankruptcy/index.htm

Source: EzineArticles
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