Off set of funds by Bank

ceecee31

Can anyone please tell me, if I have a credit card through my bank, which was in arrears and is now part of a payment plan through a collection agency (payments being made regularly every month), can the bank still offset any funds I have in my account with them to cover the debt?

Thanks a lot.

opinions4u

Technically yes.

Although if they've agreed to your current arrangement it's unlikely (but not unheard of).

coolesticeking

As opinions4u has said - I defaulted on a HSBC Credit Card and this was passed to a third party debt collector for them to so called service, quite funny HSBC can still tell me what the balance is and they know when I've made my payment to this other company and everything!

chanz4

its because same company maybe?

ALIBOBSY

Could be in house collectors or a company collecting on behalf of the halifax rather than it being wholly sold on to a third party.

It used to be they could only offset funds if you also held a mortgage with the same lender,but I am not sure how it stands legally otherwise. Given what banks are like they will likely tell people this is the case, but I don't know what the actual law says.I would imagine there may well be an arguement any capital should be split pro rata between any debts due. Best bet would be to keep up the arrangement and transfer the cash to a bank you don't have debts with I assume you need the cash for other bills otherwise it might be easier just to pay it off.
Ali x

gizmo111

It used to be they could only offset funds if you also held a mortgage with the same lender

When? Are you confusing this with an offset mortgage product which is completly different?

The bank have right of offset and can take your money in credit to pay arrears/ - this is why any good debt guide will advise you to bank with someone you owe nothing to.

opinions4u

It used to be they could only offset funds if you also held a mortgage with the same lender,but I am not sure how it stands legally otherwise.

The 'Right of Set Off' applies to any debt that is not being maintained in accordance with the terms and conditions of the loan agreement. The T&Cs of a typical savings/current account will say (subtly paraphrased) "We can take whatever we want whenever we want out of this account if you are not up to date of your overdraft, loan, credit card, mortgage or other debts with us".

The law allows it. The regulator is currently considering steps to restrict the application of 'Right of Set Off' but I doubt very much they will ban it.

I've no idea where your "mortgages only" rule comes from.

ceecee31

Thanks everyone for their input. One more question - if the bank, god forbid, took funds out of my account to pay towards the account in arrears, do they have to tell you first of all? On second thoughts, this sounds a really stupid question, since if they told you, then you would simply remove all the available cash before they took it!!

clairbear1000

I think they tell you they have done it. It happened to me once and I got a letter, by then it was too late.

coolesticeking

Yes it seems they take the money straight away and then send you a letter to inform you. As others have said it's too late then! You have no doubt checked your balance before the letter even reaches you.