Right to Offset ~ Debt Managements and Consolidation

Written by Lizzy on Thursday 20 January 2011

One of the most important things to do when you are in debt is change your bank account. If you owe money to the same bank where your income is paid into then they can apply what is called the Right to Offset. It is therefore important, whether doing a DMP, IVA, Bankruptcy or arranging your own plan to change banks as soon as possible.

If you have a current account, but also have a loan or a credit card with the same bank, that creditor at anytime apply what is called the Right to Offset which means that they can take any income paid in the current account to pay off the other debts. They can do this without permission and can legally do this whenever they want.

As long as you are maintaining your full contractual payments for your debts then there would be no reason why your bank would need to take funds to repay the debts. If you are looking into a DMP, IVA or Bankruptcy then you need to open a new bank account as soon as you can and get your funds transferred into your new account. If you are making you own arrangement with your creditors and offering reduced payments, again opening a new bank account would be beneficial, just to be on the safe side.

To see if your bank account is linked to any of your creditors use the list below to find out.