Guidance

Bankruptcy: Payment Protection Insurance (PPI) mis-selling claims

Published 12 August 2015

1. Overview

PPI is an insurance contract generally taken out when a loan or credit card is obtained. This contract is an asset, as is the right to complain if it was mis-sold.

If you took out PPI prior to becoming bankrupt, then the PPI and any claim that it was mis-sold must be handed over to your bankruptcy trustee or official receiver.

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.

2. Why must the PPI mis-selling claim be paid to the trustee?

The right to make a claim comes into existence when the PPI or other product was originally mis sold. It is still an asset in the bankruptcy even if you didn’t know you could claim compensation until after your bankruptcy. PPI is a separate contract to the loan or credit card it covered. Even if the loan has been repaid in full, any compensation for mis-selling is still a bankruptcy asset.

3. Can I claim the funds for myself?

The mis-selling claim belongs to the bankruptcy estate. Funds cannot be returned to you under any circumstances. Ill health, hardship or discharge from bankruptcy does not entitle you to the funds. If you make or continue a mis-selling claim after you become bankrupt, any funds must be paid to the trustee. You might still be liable for fees if you agree to pay someone to make the claim for you. For further information, contact the Insolvency Service PPI team.

3.1 Insolvency PPI Team

Email: RTLU.NorthEast@insolvency.gsi.gov.uk

Telephone: 0113 200 6096 Monday to Friday, 9am to 5pm Find out about call charges