In 2015, the case of Green v Wright decided that if someone had completed an Individual Voluntary Arrangement but was awarded compensation in a Payment Protection Insurance (PPI) claim, the compensation should go to the debtor rather than the creditors. The arrangement supervisor appealed this decision and is now appealing to the High Court in London. Here we look at how these things are linked and what this case means.
What is PPI?
Payment Protection Insurance (PPI) was sold to “insure” debt repayments. However, it was sometimes sold to customers without their knowledge and was found to be virtually worthless. Following investigation, the banks began compensating those who were mis-sold insurance. According to Sky, lenders now face a further £5 billion compensation bill.
What is an Individual Voluntary Arrangement?
According to the Government, an IVA is where you arrange with your creditors to pay all or part of your debts. This arrangement is managed by an insolvency practitioner.
What does this case mean?
Many people who hold an Individual Voluntary Arrangements have them because of difficulty repaying unsecured debts. If this applies to you, look at an IVA from Carrington Dean and other providers to compare. Most of these debts probably involved PPI, and the debtor could be entitled to a refund. If the debtor’s arrangement is ongoing ,any refund is divided amongst the creditors. If the debtor agreed to a PPI Extension, that is what matters. If the debtor’s arrangement has ended but there is no PPI Extension in place, this case may be important but it will depend on arrangement and the wording of the completion certificate. This case means that debtors could be entitled to PPI refunds paid after arrangements have ended, but the case needs to come to the end of the process before we will know for certain.
If you had an Individual Voluntary Arrangement that has recently been closed or is due to be closed imminently, this case could end up affecting you. This does not constitute legal advice and all situations are different, but if you think you may be affected and are not sure how to proceed, the right course of action is to contact the Citizens Advice Bureau or a solicitor who specialises in insolvency.