Under normal circumstances if you receive a windfall perhaps in the form of an inheritance payment or a lottery win after you are discharged from Bankruptcy this money will be yours to keep. This is because these are new assets. They did not exist at the time you were bankrupt.
Given this you may think that a PPI mis-selling compensation payment from a claim made after you are discharged is also a new asset and as such will also be yours to keep. However this is not the case.
We explain whether you will receive any compensation if you make a claim for PPI mis-selling in these circumstances
PPI compensation is an unrealised asset of Bankruptcy
Any claim for mis-selling against PPI which was sold to you before the date of your Bankruptcy is viewed as one of the assets of your estate and must be handed over to the Official Receiver (OR). This is because the opportunity to make the claim and receive compensation was available at the time you were bankrupt.
Because it is part of your estate such a claim therefore remains the property of the OR even after you are discharged and as such if and when it is made and compensation paid this must still be paid over to them.
BMD Tip: The ownership of unrealised assets is not passed back to you after you have been discharged. This makes a compensation payment from a PPI mis-selling claim very different to a standard windfall and any such compensation payments will almost certainly be paid to the OR and not to you.
What if my claim is against a bank which was not included in my Bankruptcy?
It is possible that you were mis-sold PPI on a loan which you repaid in full before you went Bankrupt. You might therefore think that because the loan was not part of the process and the bank concerned was not involved that you should be able to keep the compensation if you make claim against this loan.
However this compensation claim is treated in exactly the same way as if the debt had been part of the bankruptcy. The claim is still classed as an unrealised asset that you owned at the time and was therefore also passed to the OR and any compensation due under it must still be paid to them.
Can I negotiate with the Official Receiver?
One way that it might be possible for you to still benefit from a PPI claim after you have been discharged is if you agree with the OR that you will share any compensation that you are awarded.
Once you have been discharged you are not under any obligation to make claims and as such if you do any compensation payment will be an unexpected bonus for your bankruptcy estate.
This being the case it may be possible to discuss the possibility of making a claim with the OR on the agreement that you will be able to keep some of the compensation given that you have done the work to submit the claim. The may not agree to this proposal however it is certainly worth consideration.
BMD Tip: Even if you make an agreement with the OR to share any compensation awarded beware that some banks may simply keep it use it to offset the debt that they are still owed. If this happens neither you or your bankruptcy estate will benefit from the claim.
Could I use a claims company to help me?
Ultimately there is nothing to stop you making a claim for PPI compensation after you have been discharged from your bankruptcy.
It could be argued that it is in fact your duty to do so as any payments received will be put towards the debts that were not repaid in your bankruptcy thus reducing the losses of your creditors.
However there is a problem with using a claims management company to help you make a claim. This is that the they will want to charge you a fee which is normally paid as a percentage of the compensation you are awarded.
Given that all the compensation you are paid will have to be given to the official receiver you may therefore end up in debt to the claims management company for its fee which you do not have the money to pay.
BMD Tip: It is best to manage the claim yourself unless you get it in writing from the claims management company that you will owe nothing if any compensation paid is simply passed to the OR.