Lloyds PPI offer - they want me to use money to pay off loan!!!

[moneyworries]

Long story short, I have a DMP with Payplan who are managing my debts. One is with Lloyds for a £29k loan which includes £7k worth of PPI. I challenged them on missold which they disputed (I cannot categorically prove them otherwise unfortunately so I won't go into it). They have basically offered to refund half but are insisting that if I accept it, it will be used to pay off some of the arrears on my loan - is this allowed?!

[alanalana]

Originally Posted by moneyworries

Long story short, I have a DMP with Payplan who are managing my debts. One is with Lloyds for a £29k loan which includes £7k worth of PPI. I challenged them on missold which they disputed (I cannot categorically prove them otherwise unfortunately so I won't go into it). They have basically offered to refund half but are insisting that if I accept it, it will be used to pay off some of the arrears on my loan - is this allowed?!

I believe they can use any recredited PPI to pay off arrears on a loan. However you could put up a fight and say if the PPI had not been added - mis-sold then you may have been able to keep up the payments on the loan. You can also argue that a loan amount and a PPI amount are two separate contracts and therefore they should not use the PPI refund to pay off any outstanding amount on the loan.

You should also use the fact that you have been prepared to try and resolve the issues through a DMP

Have a look at these forums for more information..

debt collection Industry
Legal Issues

hope this helps

aa