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Quick question re PPI pre Bankruptcy

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A really quick question for anybody in the know - I have paperwork for several loans I took out between '98-'01 (they were all churned one into the other) and I have spoken to the FOS who said I am fine to put in a claim. The car dealership who sold me the product were not regulated by the FSA at the time, however the loan underwriter / product provider was and I presume this is who the FOS will go after?

I was bankrupt in 2008, discharged 2009. Loans in question were not part of BR as they were paid off in full 7-9 years prior to BR. I have several compelling reasons why I believe each policy was mis sold, so if I put a claim in and am successful would any monies be mine to keep? It seems clear where a loan forms part of the BR then any PPI monies would go straight to the estate, however all of my loans were paid off by the end of 2001, and BR was not until some 8 years later.

I have had a quick look around the internet and opinion on this is varied: yes / no / don't know / definitely / definitely not!


I am a bit confused, hence my post. Nothing a good lawyer won't be able to get their teeth into - if I end up needing one! I thought I would try and get a heads up on here to begin with.


Many thanks

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Anything that pre dates the bankruptcy belongs to your trustee. Its up to you to tell the OR if you receive a claim. The loan company may pay the OR directly or you may receive a cheque you should pay to the OR.

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Hello bankingcollapse,


I can offer you a different view to that from Miaspa because I have been in the same situation as yourself.


I had several c/c's which were max'd out during my period of being Self employed some years ago. The business failed and I went into Bankruptcy and like you was discharged within the first 12 months. I had complied with the OR throughout.

Approximately, 2-3 years later I received notification that I was entitiled to a rebate from the Inland Revenue and their inspectors thought it should be paid to the OR's. However, I contested this because the rebate was due to an error for circumstances prior to my period of s/e and had they of rebated at the correct time, it would not have impacted on the BR. The OR's agreed and the rebate was duly repaid to me directly.


Likewise, I have also claimed PPI & unfair charges from various organisations and the OR's have agreed that those are also repayable directly to me.


Therefore, it is my opinion that because your loans were taken out and repaid fully 8 years BEFORE your BR, then any PPI refunds should be repaid to you directly.


If you want to be absolutely sure, why not contact the OR's giving them your BR reference and ask them to clarify.


If the OR's give you the ok to claim I would NOT go to a management company to claim - it is easy enough to do it yourself directly. There is plenty of good advice on here to assist you through that process.


Getting lawyers involved will only swallow any income up from potential PPI refunds so personally, I wouldn't go down that route.



Santander PPI X 2 **WON** claims on behalf of son (Oct 2010/ Mar 2011)

Citicard O/H (PPI) - **WON** Compound Interest Dec 2011

Citicard O/H (Charges) Bailiffs sent in August 2012

Barclaycard - **WON** Compound Interest Oct 2011

Monument - account information being sought for OH

Citicard - self - N1 submitted August 2012

Barclaycard - self - **WON** damages for non disclosure/information now rec'd. Aug 2012

Barclaycard - relation - Failed SAR sent 29/09/11

Halifax SAR sent 18/08/2011 for relation

LTSB - SAR sent 09/08/2011 for friend

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I may be a question of the amounts involved, I guess if its a small amount it isn't going to make any difference to the creditors. My lowest PPI claim so far has been £5000 so it would make a difference a CSA reclaim of £120 I was allowed to keep.

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Following on from the above I was made bankrupt in 2009 discharged in 2010


Made PPI claim to AAAAA in 2012 to bank they partially upheld but said i should have had a single payment policy, I banked their partial repayment and complained to Ombudsman about the single payment. Ombudsman upheld my claim and wrote to bank. Bank is now saying they have to pay direct to Official Receiver unless I get a letter from OR saying they have no interest.......


OR communication:-




I have recently been offered a refund for PPI payments made on a bank loan dating back to 2002, the loan had been settled and did not form part of my bankruptcy. I require a letter of authority from you for them to release the funds to me. I understand that you may feel the funds should form part of my assets as it pre-dates the bankruptcy however I believe that as the ppi payments were made in error and the Financial Ombudsman has ordered the bank to put me back into the financial position I would have been at the time of the loan had ppi not been taken out this is not the same as at the time of my bankruptcy.


However if it is judged that the refund falls as part of my estate then as I was an involuntary bankrupt and the complainant made me bankrupt for a sum less than the refund of PPI I would like to revisit the bankruptcy and have it overturned.


I am also recovering from a second heart failure and had an aortic valve transplant and replacement aorta in July 2014 and the funds will make a material improvement to my living conditions and health prospects.




Thank you for your email regarding ppi in relation to your bankruptcy.


The bank in question will have requested a letter of authority from the Official Receiver as they will be aware of the legal side of things concerning the ppi with you previously being declared bankrupt. They have acted correctly in doing so.


You have correctly stated that the funds (from any upheld ppi claim) form part of the assets in your bankruptcy as long as a ppi was started prior to your bankruptcy date. The Financial Ombudsman's ruling is also correct but their decision and statement is based on the complaint that has been lodged being between you and the bank. Once the decision is made there is bankruptcy to factor in to where the compensation should be paid and they will also have been aware of this had that question been posed.


I have checked your bankruptcy details and note that BBBBBB have claimed in your bankruptcy for the sum of £17,000. I note you contacted the Insolvency Service yesterday and stated that BBBBBB made you bankrupt for £1400 which if so is less than the proposed compensation being offered from the ppi complaint. From the figures above you can understand my confusion therefore as this isn't what is shown in your bankruptcy records. In addition to the BBBBBB debt, the total debt owed to your creditors is more which would obviously bring into question your request to have your bankruptcy overturned.


I fully appreciate the scale and severity of what you have been through health wise this year and empathise with your situation. However as explained by my colleague yesterday and me today, I am unable to issue a letter of authority to release any ppi funds to you as per your initial email request. The ppi award is an asset in your bankruptcy and belongs to the Official Receiver.


Should the Official Receiver receive a payment from BBBBBB, depending on the size of the award, he will declare a dividend to your creditors in an attempt to reduce some of the debt in your bankruptcy. The Official Receiver is obligated to do so and has a duty to the creditors to carry out this process.


I am sorry that I am unable to offer a positive answer for you on this occasion but hope my explanation clarifies the position regards the Official Receiver and any ppi award where a ppi was started prior to a bankruptcy.




Thank you for your prompt response the contents of which are noted.

However I did not state that the funds form part of the assets in my bankruptcy, I stated that you may feel that they do. I certainly do not think that they do. The bank loan in question was opened and closed 8 years prior to my forced bankruptcy, the ppi payments made on it were in error and therefore the refund is due at the same time pre-dating the bankruptcy by some 8 years. The official receiver cannot claim monies paid by me in error prior to my bankruptcy, the bank should have refunded the monies AT THE TIME and therefore it does not form part of my assets.


If the loan was outstanding at the time of my bankruptcy I would concur with your email however this was 8 years prior, the monies were paid in error to the bank and they should have refunded them AT THE TIME. This is what the Financial Ombudsman has told them to do. The fact that they have taken 12 years to do so show in the penal 8% interest they have been forced to pay as recompense.


The simple fact is the financial transaction should not have occurred 8 years ago and therefore the refund does not form part of my assets at the time of my bankruptcy.


On a separate note BBBBBB were told in court that only

£1400 was due that was, however, enough to make the judge declare my bankruptcy. The total debt you mention was being serviced, it is not against the law to have debt as long as it is serviced. I disagreed with the amount I owed BBBBBB. BBBBBB have subsequently admitted that their figures were wrong however my health concerns have prevented me from pursuing this matter, although I may now do so.




For information the Bankruptcy Order was made against you on xxxx and you were subsequently discharged from the bankruptcy on xxxx. The PPI compensation relates to loans taken out by you prior to the date of your bankruptcy order.


The vesting in the trustee of the right to complain in respect of mis-sold PPI arises as a result of the provisions of the Insolvency Act 1986, specifically sections 283, 306 and 436. Therefore, the guidance to official receivers has consistently been that the right to complain in respect of mis-sold PPI is a vesting asset and this was dealt with on a case by case basis.



The reason that the amount due is payable to the official receiver as your trustee in bankruptcy is because the right to complain about the mis-selling of the PPI policy and to receive the payment in respect of the policy arose from the policy itself. As you paid for this policy prior to the bankruptcy, it falls within the definition of property within the meaning of section 436 of the Insolvency Act 1986. In addition, the right to make a claim arose when the mis-selling took place, that is when the contract was entered into, and this was prior to the bankruptcy order. Therefore, the right for you to make a claim arose at this time and not from when you actually made the claim. Given that the right to make the claim precedes the bankruptcy order, it forms part of your bankruptcy estate.


As the PPI policy is a separate product to the debt it was obtained to protect, the right to compensation for mis-selling will vest in the trustee whether or not the loan has subsequently been repaid. This would apply even if the loan had been repaid in full prior to the bankruptcy order. (Ward v Official Receiver.)





Any advice fully appreciated

:mad: I was going to let them bankrupt me but now I am fighting!:evil:

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My advice would be hope the OR doesn't find out about the earlier PPI that you banked in 2012. He could ask for this money to be returned, and used to pay off creditors.





Any asset you owned prior to the bankruptcy belong to the OR, which will include settlements you receive on items that predate the bankruptcy. It does not matter if the settlement is on item not included in the bankruptcy, it still belong to the OR.



I think of in these terms, Bankruptcy is date of death and birth. At that point in time the old you died and the new you was born. The new you cannot be chased for debts that the deceased run up. Equally the new you does not have any rights to assets of the deceased.

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