An individual has a checking account with an overdrawn balance. He also has a HELOC with available credit. Is it permissible to add the amount of the overdrawn checking balance to the HELOC? Thanks.

I would say only if you have an authorization from the customer to do so. I doubt your Note Agreement on the HELOC has that clause in it (to just do it). We allow our customers to sign a sweeps agreement that will transfer the funds automatically if the checking account gets overdrawn.

Generally right of offset does not allow the offset of one debt by another debt.

The right of offset is designed to allow the FI to take money they owe you, monies in a DDA or Savings as an example, to offset a debt owed them.

You need to check your state law and I would suspect you will find you cannot offset one debt with another.

I recall something a few years back that indicated a bank can't offset an account with governmental direct desposits (not the garnishment rules but something regarding banks and offset). Am I remembering correctly or have the garnishment rules skewed my memory?

Our account agreement states that we may offset immediately, but I don't want to miss something. I appreciate any information.