Payment Protection Insurance (PPI) after bankruptcy
A guide to what happens to a PPI claim after someone has been made bankrupt in England and Wales.
Payment Protection Insurance (PPI) is an insurance contract generally taken out at the time of a loan or credit card. The law states that this contract is an asset in the bankruptcy, as is the right to complain if it was mis-sold. Where a PPI contract signed before the date of the bankruptcy, the right to claim compensation belongs to the bankruptcy trustee.
Information for creditors
If you’re a creditor in a bankrupt’s estate, the official receiver will contact you if money is available, following a successful PPI claim.
If you have not already made a claim in the bankruptcy you will be asked to complete a proof of debt form. This form asks you for information about the money you are due. When we write to you, we will tell you the date you need to send the information to us by.
We’ll then process the claims and make a payment to you. This will usually take up to 8 weeks.
If there is no money available to pay the creditors, we will not contact you.
You can find further information about how to register as a creditor in personal insolvency.
Contact the official receiver
Information for claims management companies (CMCs)
In limited circumstances, we can make a payment who has dealt with a PPI claim on behalf of a former bankrupt.
We might be able to pay up to 10% of the invoice amount, to a maximum of £600.
We will not make a payment if the CMC was aware the individual was previously bankrupt.
How to submit an invoice
Invoices must be emailed to the Insolvency Service at rtlu.northeast@insolvency.gov.uk.
The following supporting evidence must be provided:
- full details of the PPI award, including the name of the bank and the value of the award
- the full name of the former bankrupt, and the bankruptcy reference if available
- a letter of authority signed by the former bankrupt
- confirmation that the CMC was not aware of the bankruptcy at the time they started the claim. This is usually within the terms and conditions of the agreement
Rejected invoices
We will not always be able to make a payment towards an invoice.
There are some reasons why we might not be able to pay. This might be where:
- there are not enough funds on the case to make a payment
- you have not provided all the required documents
- you have not provided evidence to show you were unaware of the bankruptcy at the time you started work on the case.
We also might not be able to make a payment if the PPI provider has used their ‘right of insolvency set off’, also known as ROSO. This is where the PPI provider uses funds from the award to reduce the balance of their bankruptcy debt. In some cases, there will be no money left to pay to the Insolvency Service. If this happens, we will not be able to make a payment towards the invoice.
Deadline for submitting an invoice
We are writing to CMCs to tell them there is a deadline to submit their invoice. Details of the deadline are contained in the email.
CMCs with outstanding invoices should forward them to the Insolvency Service at rtlu.northeast@insolvency.gov.uk, as soon as possible.
Contact us
Email: rtlu.northeast@insolvency.gov.uk
Telephone: 0300 6780015.
The helpline is open 9am to 5pm Monday to Thursday, and 9am to 3pm on Friday.
Information for bankrupts and former bankrupts
You must tell the official receiver if you took out PPI before becoming bankrupt. This is because the right to make a claim is from when the PPI or other product was originally mis-sold.
This is the same as other financial products which have been mis-sold including other loan and credit card protections, bank accounts, interest rate deals and loans.
Why the PPI mis-selling claim is paid to the trustee
As the PPI claim is an asset in the bankruptcy, you no longer have a right to the money paid out. Instead the money will be paid to your trustee as part of your bankruptcy estate.
This will happen even:
- after you have been discharged from bankruptcy
- if you didn’t know you could claim compensation until after your bankruptcy
- if the loan has been repaid in full
This money cannot be returned to you under any circumstances. Ill health or financial hardship does not entitle you to the money.
If you have a PPI claim
You must tell the official receiver if you think you’ve been mis-sold a PPI policy or if you have a claim in progress.
You must also tell the official receiver if you have previously made a claim and already received the money.
If you’re contacted by a claims management company
You do not need to process the claim yourself, as this will be done by the Insolvency Service. If a claims management company contacts you and encourages you to make a claim, you should say no and speak to the official receiver. You should do this even if they say your claim is not affected by your bankruptcy.
If you continue to make a claim after bankruptcy, you might be responsible for paying the claim company’s fees and commission. This is because your bankruptcy estate is entitled to receive all of the money.
For further information, contact the Insolvency Service PPI team.
Contact us
Insolvency PPI Team
Email:RTLU.NorthEast@insolvency.gov.uk
Telephone: 0300 6780015
The line is open 9am to 1pm and 2pm to 5pm Monday to Thursday, and 9am to 1pm on Friday. Find out about call charges
Last updated 24 May 2021 + show all updates
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Added guidance for creditors and claims management companies
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First published.