A reader asked:
I have 4 credit cards and 3 loans that defaulted over 10 years ago, total £45k+. They are no longer on my credit records and I haven’t paid them (long-term unemployment) or been in contact with any of them during this time. None of them have written to me for 3-4 years. I am as confident as I can be that they will be statute barred.
Several of the cards had PPI. I haven’t pursued this, as I understand that any refunds would simply be offset against the outstanding debt. But with the PPI deadline looming I have decided to take one final look at this.
My question is: if I contact them regarding mis-sold PPI’s, would this mean I therefore admit to “owning the debt” thus resetting the 6 year clock so they may again chase me for the debts and even start CCJ proceedings?
The reader asking this question obviously knows a fair bit, but for anyone else reading, some more details about PPI claims before I answer his question!
The deadline for starting a PPI complaint
As I am writing this, there is a bit over seven weeks to go until the deadline for starting a PPI complaint – the 29th August 2019.
So if you are trying to decide about a PPI complaint it is urgent!
Until recently, it has always been easy to put off making a claim, especially if you are busy or don’t have your old paperwork. but now you do need to take action very soon.
It’s now easy to make a PPI claim
The good news is that it is now very easy to do this. The FCA has a short video, here.
The FCA has an online checking tool to find out where any complaint should be sent.
Say you remember you had an Egg card but that was a long while ago. I’ll use this as an example in the rest of the article.
When you put Egg into that tool and it says you send a complaint to Barclays. You can do this by post, phone or online and the checker gives all the contact details. I always suggest people do these online.
You don’t need to know the number of your Egg account or the date you opened it.
You don’t even have to have good reasons to think the PPI was mis-sold. You could have been overcharged for the PPI and get a refund for that, see PPI – complain before August 29th – even if you have been rejected before! for details.
All the banks and credit card companies now make this as easy as possible. Here is what the Barclays page says:
You don’t need to use a claims management company (CMC). Please contact us directly – we handle complaints in the same way, within the same timeframe and without charging any fees. Making a complaint about PPI or PPI commission won’t affect your relationship with us, and will have no impact on your credit history or your ability to get financial products from us in the future…
If you’re not sure whether you had a PPI policy, you can ask us to check. From 30 June 2019, if we find you did have PPI, we’ll raise a complaint on your behalf to make sure you don’t miss the 29 August deadline for PPI complaints.
Don’t fall for the Claims Company adverts
Claims Companies aren’t allowed to say you are more likely to win a complaint if you use them – for the good reason that it isn’t true!
Instead they try to make it seem easier. I expect you have seen their ads:
- Use our online PPI refund checker to look up your name and find out if you have a refund waiting.
- Check here to see all properties where there is a refund still unclaimed and check the amount.
Sounds convenient? But there is no secret database they can look up your name or your house on and see if there is unclaimed PPI!
If you make the big mistake of clicking on one of these, they ask who you have had cards, loans, mortgages or overdrafts with. When you say bank X, then they send bank X an enquiry asking for your account details and whether you paid PPI on it. It’s the same enquiry you would send. It’s not instant. It’s no faster than you asking Bank X yourself.
If you don’t know which banks and other lenders you used, there is no way for a Claims Company to find out.
So pop Bank X into that FCA checking tool and send them the complaint yourself. Or go through Resolver, an unusual claims company, recommended by Martin Lewis, which sends in your complaints but doesn’t charge you anything, even if you win.
Is it worth claiming PPI for very old debts?
Here are some of the most common situations.
1. “I paid the debt in full”
Here it is definitely worth making a PPI claim or asking if you had PPI where you aren’t sure.
There are millions of people who paid PPI where they can probably get a refund.
Many people were signed up for PPI without being asked. The box was automatically ticked on the credit card or loan application and you may not have noticed it.
2. “I am still paying the debt off (or have made some payments in the last 6 years)”
If the old debt is part of a payment arrangement or a debt management plan, you could still be paying it after many years. Sometimes you will still be paying the original lender, sometimes the debt may have been sold to a debt collector.
Here it is also definitely worth making a PPI claim.
Sometimes the refund will be paid to you but often it will be used to clear or reduce the debt you owe. This can’t be predicted. You may prefer the cash, but reducing the debt is still a good thing!
But here it is important you do not use a claims company.
If you win your complaint through a claims company, your Egg debt, currently with a debt collector, may be reduced from £2800 to £400.
Which sounds good but you will now owe the Claims Company their high fees. They may send you a bill for £500 or more, and you didn’t get any cash to pay that bill with…
People can be taken to court by a Claims Company for not paying a bill in this situation, and they end up with a CCJ.
So make the PPI claim yourself.
3. “I think it’s statute barred”
A debt is statute barred if the creditor has left it too long to take you to court, so they now wouldn’t win a court case.
If you have made a payment to a debt or you have acknowledged it in writing in the last 6 years, a debt can’t be statute barred. In this case, read (2) above.
The reader thinks his debts are statute barred. He says he is as sure as he can be… and after 10+ years he is probably right. But it is now harder to tell if a debt is statute barred after a recent court case, see Common questions about statute barred debt for more details.
Making a PPI Claim resets the 6 year clock if a debt is not already statute barred. So if it would be in a year, you would have a difficult decision to make: claim now and reset the clock or keep your fingers crossed and hope the debt becomes statute barred.
But if a debt is already statute barred, nothing can “unbar” it. Making a PPI claim would be safe.
But a refund can still be used to pay off the remaining debt, even though it is statute barred. So it’s only worth doing this if the PPI refund will be bigger than the debt.
Suppose the reader had that Egg card for two years when he defaulted owing £5,000. That wasn’t very long to have paid PPI and so his refund may well be less than the balance. But if he had had the credit card for 8 years and the balance was only £1,000, it’s very likely that a PPI refund would be more than the amount owed so he would get some cash from this.
Here it is even more essential not to use a claims company! If the refund is smaller than your balance, you can end up paying the claims company fees in cash for them reducing a debt you were never ever going to pay.
4. Bankruptcy, IVAs and DROs
If you paid any PPI after you went bankrupt, entered and IVA or a DRO, then you can reclaim that PPI. But PPI paid before is more complicated, even if the debt you paid the PPI on was not written off in your bankruptcy, IVA or DRO. see How IVA, DRO or bankruptcy affect PPI claims.