Hi Aaron.

If about to enter into personal insolvency (from a DMP), what do you envisage would be the benefit of reducing the debt?

I suppose for a minority of people it may enable them to meet acceptance criteria that they didn't otherwise. For just as many people I'd guess it would move them outside of acceptance criteria leaving them without access to the option they were considering.

Perhaps best not to do anything without seeking advice from the proposed IVA or trust deed firm first?

Thanks for the reply. The reason I asked is because I have seen many succesful claims. I used to work for a company which offered PPI claims alongside debt management plans. In some cases they would wipe off a large chunk of the debt itself. Therefore improving the clients financial situation enough for them to manage without any further help.

Looking over a clients case before submitting it to claim. I can normally judge by the size of the claim, the creditor and the clients circumstances at the time of taking the agreement. Whether they are going to recieve a claim and roughly how much.

Would it be right to pursue a Trust Deed / IVA if I knew that a succesful set of claims could dramatically change the clients situation? Would it be worth the chance. Which would be morally right to do first?

If the client was under the Trust Deed or IVA whilst they were trying to claim with assistance. Their may still be Fees to pay to the company assisting them. Would this not cause problem?

Hi Aaron

I think if you were aware that a successful claim could have a major impact on reducing debts, then I think this should be pursued before entering into any formal arrangement.

You would need to be in a position to somehow calculate potential returns from these claims and then take a view. This would result in 2 scenarios, firstly the information indicates that the total debt has been reduced to the extent that the options available have increased. ie Trust Deed or bankruptcy may be the option at stage 1, but successful claims reduce the debt where a 12 month DMP or shorter DAS was now achievable.

Secondly, you obtain the projected results and these will not make a significant difference to the position and DAS, Trust Deed or even bankruptcy is still the option. But what do you do with the funds? Do you pay creditors or safeguard for a Trustee? I guess it depends. If the funds were equally split between creditors pari passu, then I dont see how a Trustee could challenge these payments, however if there was an imbalance in payments, it may give rise to a challenge.

Mark

Hi Aaron.

A trust deed or IVA should always been seen as a last resort, so it makes sense for anyone to think through whether other options are available to bring debts under control before going ahead.

The Financial Services Compensation Scheme recently reported that 83% of people that make their own PPI complaints are successful, and that this figure only rises to 87% when people use a claims company (which will typically take 25% of any payout).

Given that using a claims company for a PPI claim makes almost no difference to your chances of success, does your moral argument extend to encouraging people to make their own PPI claims to give them the best possible chance of receiving enough money to avoid a personal insolvency such as a trust deed?