After-Acquired Assets - Are You Aware Of This?

[Rick71]

Hello all

I’m new here, and there are a couple of topics that have caught my attention, specifically about PPI claims. For what it’s worth, here is my experience. Apologies if it’s been covered before elsewhere on this forum, but I hope it’s of some use.

I’ve been in an IVA for the last 12 months. My sole creditor is NatWest. I have no debts to anyone else (no credit cards, store cards, anything), and the reason I entered into an IVA was due to a personal loan I had with NatWest and the increasing difficulty of meeting the monthly repayments, what with a continuing pay freeze at work and the rising cost of living. Having previously been in the familiar cycle of one loan consolidating the last one and basically being beholden to the bank (not a great situation to be in), and despite having got into the habit of keeping strict records of all my financial transactions so I knew exactly where I was at any given time, the monthly repayments were becoming an increasing strain and I was keen to break out of that cycle. So, after lots of advice, careful thought and soul-searching, and knowing full well that the alternative was to once more go cap in hand to the bank (which I absolutely did not want to do again), I decided to apply for an IVA.

I was told that my application was quite easy to process, as having only one creditor and a distinct lack of credit/store cards, private loans etc made it much simpler. The IVA was agreed and it is by far the best financial move I have ever made.

Now, the PPI aspect. Just prior to going in to the IVA, I had lodged two PPI claims with NatWest. Obviously, my having an IVA changed the complexion of it, and I was aware that the lion’s share, if not the whole amount, would have to go towards the debt, and I was unlikely to see a penny of it. During the process of deciding whether or not to go for an IVA, the whole thing about “windfalls”, as well as any money earned outside my regular salary, was explained to me, so I assumed I wouldn’t see any of it.

Nonetheless, I contacted my IP (Freeman Jones, based in Manchester) to enquire as to what the procedure was. I was pleasantly surprised by what he told me.

Please read this bit carefully, as you may not be aware of what you’re entitled to.

My IP told me that, according to the regulations, I am entitled to retain, and I quote: “the first £500 of any after-acquired asset”. This regulation applies to each payment, rather than it being a cumulative figure. So in my case, it applied to both pending PPI payments. So the lion’s share of my PPI payment does indeed go back to NatWest (I like to think of it as me cleverly making my creditor pay off my debt to them by way of money they owed me anyway..!), but as one payment came in just below £500, I was entitled to keep it, and as the other payment was over £2,500, I was allowed to keep the first £500 of that.

That’s how it’s supposed to work. Whether or not this regulation is at the discretion of your IP, I don’t know. But it does exist, and if you haven’t been told about it, ask them. I guess it also depends on who your IP is – some may be more inclined towards reaping as much for your creditor as possible, whereas others may be more inclined to make sure the system works as much in your favour as they can manage. Fortunately, my IP falls into the latter category.

NatWest, or RBS, the parent company, to be more precise, have been pretty crap about it all though. My IP has had to crack the whip with them as they’ve cut corners and disregarded the IVA altogether when effectively making payments to themselves, when all payments should go through my IP. I’ve raised this with him and this will be discussed in detail during my six month review later this week. I’m not sure where I stand in terms of RBS having essentially not stuck to the terms and conditions of the IVA, but I’ll find out soon.

But the main thrust of my post is to point out (if it hasn’t been pointed out already by someone else) that in the event of a PPI claim, it is not the case that your creditors get 100% of it and you get nothing.

I hope this is of some help.

[MerlinL14]

I can understand the sub £500 windfall clause as that is what I have in my IVA proposal. However I understand PPI to be an asset and not a windfall, therefore I believe that when the PPI is claimed on my behalf that all of it will be claimed and distributed to my creditors. I don't have a problem with that either.

[Foggy]

Hello Rick and welcome .... quite some first post :0)

It will depend upon the wording of your own proposal as well as the attitude of the IP, but the general concensus is as Merlin says -- PPI reclaims are regarded as assets ad, as such, are payable in full.

That said, if your own IP thinks otherwise, enjoy the small reward

[Broke of London]

Is the after acquired asset regulation you mentioned above part of your IVA proposal or does it sit within the guidelines which govern IVAS?

[kazzafunk]

I agree with Merlin and Foggy in as much that any PPI refund is an asset available to the IVA pot.

We were allowed to keep the interest element of our PPI claim and this was paid into my bank account by our IVA firm. I was very happy with this as it was £900.

I do believe different firms are taking a different stance on things. I would just accept anything your IP firm decides you can keep - although I would probably save it for a bit just in case they discover it's an error (this is what we did with mine until I received my completion certificate).

At the end of the day if it is all paid to the IVA pot then you are increasing the dividend to creditors and it should make you feel better in yourself to be able to repay more than your original sum.

It may also help you in the future if you become able to offer a sum as a full and final amount to end the IVA early.

[carole2662]

We have heard from RBS about our PPI claim and they said that the money offered would be take off money we owe as we are in an IVA. As we were not going to claim but were pushed by our IVA company we think that this is the right thing to do.

[Rick71]

Thanks for the replies, everyone!

In response to a couple of points made...

I believe the after-acquired asset regulation sits within the guidelines which govern IVAs. To be perfectly honest, I haven't actually checked my IVA proposal to see if it's in there - I checked with my IP when I was offered my PPI settlement, and he (my Relationship Manager at my IP) laid it all out for me in terms of my being entitled to retain the first £500 of each payment. I'll check my proposal tonight, actually...

My PPI settlement offer on the first claim was for £397.26, and my IP told me I was entitled to keep that in its entirety as it came in below the £500 threshold, and that he would make sure it was directed to me.

For the second claim, the settlement offer was for £2578.43, from which I would be entitled to retain the first £500, with the remaining £2078.43 going into the IVA pot. Again, my IP assured me he would ensure the £500 came to me.

Getting the bank to do this, however, wasn't as easy as it appeared. Firstly, when I was chasing them up after it all seemed to go quiet, the various people I spoke to in their PPI claims department either didn't even know what an IVA was, let alone how it affects the claim; or had a blanket "if you have an IVA, we keep everything and you get nothing" attitude. Some claimed there was no record of my having an IVA and requested copies of the paperwork. My IP chased them up, and I received a payment. There's still a payment outstanding, though, which hopefully I should be gtting this week.

Secondly, in dealing with my PPI claims, RBS appear to have disregarded my IVA altogether and paid it all back to themselves, when my understanding of how the IVA works is that all payments, even if they are effectively to themselves, have to go through my IP first. This, I believe, is in breach of the agreement. If anyone thinks differently, do please tell me as I may well have overthought this somewhat!

I did a fair amount of research and found a few forums like this one, and it seemed (as kazzafunk has pointed out) that different IPs were taking different stances - as I said in my original post, fortunately my IP seems to be geared more towards as fair a deal as possible for the individual, rather than gathering as much revenue as possible for the creditor. I read of cases where the IP wasn't quite so "sympathetic".

As for increasing the dividend to my creditor, I'm all for that. I'm happy for them to receive more than the agreed sum, and if it were possible for me to pay everything off in full and end the IVA early, it would be hugely satisfying! Still, if I have an entitlement to retain a portion of any payout, however minimal, I'll grab it with both hands - times are tough, after all, so a little bit extra is always welcome.

[Foggy]

Hmmm .. as said above, yes, definitely, take anything your IP is willing to give ... but, squirel it away for emergencies (and in case they decide they want it back!).

Do check your proposal for the exact wording relating to after acquired assets or windfalls. These are normally dealt with as: if under £500 you retain the whole amount. If over £500 the WHOLE is paid over to the IVA ( you don't, generally, get to retain the first £500 ).

[Rick71]

Yes, I’ll check my proposal for the exact wording, just to be sure. I’ve double-checked it all with my IP, and he assures me my understanding of it is correct, but the pessimist in me can’t help but wonder if he may have made a mistake! That wouldn’t be good.

Does anyone have any thoughts on the bank’s conduct, in that the majority of payments they’ve made have disregarded the IVA and bypassed my IP altogether? Are they allowed to do that?!

I’m glad I found this forum. It’s good to come across people who are in the same boat.

[Foggy]

The bank's conduct may well be morally wrong, as the general concensus is that the repayment is to be distributed proportionately between all creditors. However, they might be allowed, by their own terms and conditions, to offset these monies against debts.

This will only really be sorted once it has been tested in the Courts ... which, I am afraid to say, is unlikley to happen due to the potential costs involved.

[Rick71]

This is something else I’ll have to check in my proposal, I think. My 6 month review is this week too, so I’ll have a chat with my IP about it. I’ve already raised it in an email to him. The bottom line, for me, is that the IVA is an agreement between me and my creditor (RBS – I have no other creditors), brokered and mediated by my IP, and that RBS haven’t stuck to the agreement by making payments directly to themselves and leaving my IP out of the loop. As far as my understanding goes, all payments made by them, even if they’re ultimately going back to them anyway, have to go through the IP – in order for him to keep track of the balance of the debt, at the very least – so if RBS are not sticking to the agreement, I wonder if there are repercussions for them? I hope so.

As I said earlier, I may well have overthought this somewhat, but it occurs to me that if I were to do something similar, I’d be in serious trouble and the consequences would be severe, so surely there must be some clout my IP has in terms of addressing their conduct? I’d hope so..!

[MerlinL14]

I think the Bank's conduct borders on illegality, they, you and your debts are tied and governed by the IVA and administered by an IP by law. Any monies, irrespective of their origin should go through the IP's 'books' for him/her, as the legal administrator of your insolvency, to be paid as percentage dividends to all creditors. You are not allowed to make preferential payments to any of the creditors tied in your IVA, therefore neither should any of your creditors. I am sure your IP will rein them in and let them know where they stand.

[Rick71]

Extremely well put. That’s how it would seem to me. In an ideal scenario, my IP would have enough clout to be able to say to them, “You’ve breached the terms of the IVA to serve your own self-interest, therefore as Administrator of the IVA I declare it void as a result of your conduct and order you to write off all debts with my client, with no adverse effect on his credit rating”.

Not going to happen, I know, but it felt good to type it anyway! It will be interesting to hear what my IP has to say though.

[Broke of London]

I think you are overthinking! As you only have one creditor the outcome is the same - that the balance of their debt is reduced.

What would you like to see happen to RBS and how do you think it would affect you?

[Rick71]

Probably! It’s a trait I have..!

Good question. The way I see it is that I owe a debt to RBS and it needs to be paid, which I don’t have a problem with at all. But we’re both bound by the rules of the IVA and they haven’t stuck to them. If I did that, the IVA would fail, I’d be liable to pay the debt in full and I’d have no protection from their bully-boy tactics – bailiffs knocking on my door etc. I see their disregarding the rules as supremely arrogant (“We’ll do what we like, thank you very much, because we’re a huge corporate entity and we can... What are you going to do about it, little man?”), and having agreed to the IVA, they should be just as subject to its punitive side as me, irrespective of the fact that I am their debtor.

The ideal scenario I outlined in my previous post just wouldn’t happen, I know, but I’d like to think that there’s some provision within the IVA that allows my IP to bring them to book for breaking the rules. Realistically, that probably extends no further than him making clear to them that he knows they’ve cut some corners and someone at their end saying, “Yes, sorry, someone made an oversight, it won’t happen again”.

Hmm... I haven’t actually answered the question, have I?!

I’d like to see RBS forced to hand over the PPI payments they’ve retained and not passed to my IP, to me. They’ve been punished in a way that benefits me, my finances get a much-needed boost, and my IP has cracked the whip over them for flouting the rules.

Of course, I can’t see that happening. I just find it extremely unfair that rule-breaking on their part seems to carry no consequence, whereas on my part the consequences would be severe.

Still, I won £2.90 on the Euromillions last night. They're not getting their hands on that. I win!