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#31571 - 09/06/02 07:17 PM Setoff/Offset

I need some guidance on setoff or offset. I assume that the UCC defines the rules for setoff - is this correct? Is there a resource that anyone can recommend for researching setoff questions? Also - does the right of setoff extend to lines of credit or Home Equity Lines - if we don't have a specific agreement to cover overdrafts by extensions of credit on either of these products?

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#31572 - 09/06/02 08:18 PM Re: Setoff/Offset
PatrickG Offline
100 Club
Joined: Jun 2001
Posts: 165
Binghamton, NY, USA
There was a good thread on this topic a while ago. I do not know how to "point" to it, but, if you do a search on "set off", it will show up in the results. In NY, we have additional laws relating to "Right of Set Off". It's a good idea to check your state law.

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#31573 - 09/06/02 09:47 PM Re: Setoff/Offset
Andy_Z Offline
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Joined: Oct 2000
Posts: 27,746
On the Net
This can be a thorny subject. I think there is UCC, common law, Federal law, state law and most certainly case law. There are tons of cases helping determine what can and can not be setoff. You have to address bankruptcy, IRAs, pledges, etc.

We asked counsel for info on this and I have a 22 page document from 1990 addressing various issues with setoff. I am not able to share it, but want to emphasize how big this could be. You need to decide what part you want to understand. If it is critical, consult counsel. If it is general knowledge, do a Google search and focus on your state. Then look at your bank contracts and agreements for clauses.
My opinions are not necessarily my employers.
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#31574 - 09/10/02 11:37 PM Re: Setoff/Offset
SJB Offline
Diamond Poster
Joined: Jun 2002
Posts: 1,210
Anon -

You need to get advice specific to your state. For example, exercising the right of setoff in California against a deposit account to partially satisfy a real estate secured debt (e.g., home equity) could result in releasing the security. This is due to what is called the "one action" rule in California. I think Reg Z also addresses setoff regarding credit card debt.
My opinions are not legal advice and are worth what you paid for them.

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