Could A Ppi Refund Help To Avoid Seeking Debt Help?

By Author: UKmoney Solutions
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As a result of a judicial review completed in April 2011, the courts ruled that banks and lending institutions had been mis-selling payment protection insurance alongside loans, credit cards and mortgages, and the court’s ruling meant that anyone who had fallen victim to the mis-selling was entitled to make a claim to recover their money.

The amount of money that has been set aside by banks in anticipation of potential claims is reported to be as much as £10 billion. This amount of money is so huge that it is expected that the number of people seeking debt help over the next two years will actually reduce because people will be able to pay off debts using the windfalls received as compensation for PPI mis-selling.

Obviously, people will have needed to have taken out credit cards or loans to have ended up paying Payment Protection Insurance in the first place. This will mean that many victims of the mis-selling scandal will have racked up sizeable debts in some cases, and statistically it stands to reason that a fair proportion of these are struggling to ...
... make repayments. In previous years, people suffering with credit over-commitments may well have sought assistance either through a professional debt help company or maybe a charity organisation or similar. However, it is thought that such is the huge scale of PPI refunds currently being issued, that this is in itself solving many people’s debt problems.

According to some reports, £1.9 Billion of mis-sold PPI was returned to customers in 2011, and with the growth of claims management companies that assist people with making these types of claims, it is expected that up to double that amount will be reclaimed this year. Not only will that money help people pay off their debts, but some economists are even predicting that it will also provide much needed stimulus for the UK economy as a whole, such is the scale of the refund money up for grabs. Not only that, but some newspapers such as the Financial Times are predicting that the banks may have under-estimated the scale of the problem and may not have actually put enough aside to cover all the claims that will be made.

Realistically, it is highly unlikely that the PPI refund frenzy will solve all of the UK consumer debt problems forever, and that for many it will only provide a short term delaying of the inevitable. Many people will choose not to repay outstanding debts at all, and prefer to enjoy themselves with spending sprees, holidays abroad and home improvement purchases with their PPI refund money. Therefore, it is predicted that this current ‘trough’ in people searching for debt help will only be a short-lived phase, with some reports predicting that people seeking debt advice will be hitting record levels again year on year from 2013 onwards.