Skip to content
BOL Conferences Top Gun 23
Thread Options Tools
#1524541 - 03/21/11 04:16 PM Right of setoff vs garnishment
Compli(cated) Offline
100 Club
Joined: Mar 2011
Posts: 185
Wisconsin
It is my understanding that the new garnishment rules will not apply to contractual right of setoff as they only cover actions resulting from court proceedings. Is this correct? Does anyone have any more insight into this?

Return to Top
General Discussion
#1524843 - 03/21/11 09:04 PM Re: Right of setoff vs garnishment Compli(cated)
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Garnishment is one method of taking the customer's funds. Set off is a different method. There is no connection between them and the new regulations do not affect that.

If you are asking if you can exercise a right of set off against funds traceable to federal benefit payments, my response would be, "No."
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#1525043 - 03/22/11 03:15 PM Re: Right of setoff vs garnishment Elwood P. Dowd
Compli(cated) Offline
100 Club
Joined: Mar 2011
Posts: 185
Wisconsin
Thank you for your reply, Ken!

Last edited by doedoe; 03/22/11 05:36 PM.
_________________________
Opinions are my own.
"I was gratified to be able to answer promptly. I said I don't know." - Mark Twain

Return to Top
#1531230 - 04/04/11 07:01 PM Re: Right of setoff vs garnishment Compli(cated)
Lilly1234 Offline
Member
Joined: Dec 2010
Posts: 50
A question regarding this topic...just for clarification...

Currently we Process Right of Setoff before garnishments and levies. Can we still do this? Or will be have review the account for protected funds, before our accounts control department performs Right of Setoff for Deliquient loans?

We don't do this very often, but when we do, we do Right of offset first then process the garnishment.

Return to Top
#1531546 - 04/05/11 04:31 PM Re: Right of setoff vs garnishment Lilly1234
Georgia Plum
Unregistered

You must do any right of offsets PRIOR to receiving the garnishment in the bank. Once you've received the garnishment, you must hold/remit whatever funds are in the account at the time you received it less the protected amount.

Return to Top
#1533262 - 04/08/11 02:57 PM Re: Right of setoff vs garnishment
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,870
Cape Cod
Whether you have a right of setoff against garnishments may be a matter of state law. For example, you can't exercise setoff in front of an IRS levy (which isn't a garnishment order under the regulation, anyhow), but you might be able to setoff in front of a state-court-issued garnishment order. Check with bank counsel to determine when setoffs may and may not be taken, and the technical requirements involving default, etc.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top