Setting off

michael30501

Newbie question. Hope this is in the right forum, apologies if not. I'll try and keep it short.

I'm in the entertainment business and have been unemployed since the beginning of the coronavirus. I hadn't earned enough to qualify for government loans or schemes so have been claiming Universal Credit since April. After an initial 'holiday' period with two loans I have and a further extension I am still not back working (even though I'm constantly lookeing for other alternative employment) Long story short, I'm now faced with a default notice heading my way in about a weeks time. I have been advised by Playplan to set up another bank account as my current bank can set in motion a 'Setting off' situation, which I have just received notice of in a in a letter. 

I have set up another back account to be able to continue pay my regular household direct debit bills but I've read that my current bank can take money from other accounts to pay the debt I owe them. So my question is, does this mean 'other accounts' you have with your current bank or can my current bank demand/access my new bank account and take money from that?

I'm sorry if this sounds naieve but as someone who never missed a payment on anything EVER, this whole situation has left me frustrated and extremely stressed.

I hope someone can offer some advice

Thanks
Michael

fatbelly

Hi 
I think Martin wrote an article on this which I'll try to find.

A bank can only access a current account that's in the same 'family' - in practice this doesn't happen often but Payplan are correct to warn you of the possibility and that is why we always recommend that you do not bank where you have debts.

It's here (updated 3 days ago!)

https://www.moneysavingexpert.com/banking/setting-off/

michael30501

Thank you. I did read that article and the best I could find was "The Bank may, without notice, set-off a debit balance, or debit interest, on an account against any account with a credit balance or credit interest held by the same account holder."

For me that's still ambiguous with respect to whether it means 'any account with a credit balance'  with your current bank or I can they can access other accounts outside their own banking group. 

Thanks

michael30501

I've just spoken to someone at a debt help service who said they should not be able to access accounts outside their own banking group. The 'should' word sounds concerning 

fatbelly

They can not access a bank account that is outside their banking group - that is why we always recommend that you do not bank where you have debts.

michael30501

Thank you, got it.