lloyds Set-Off Question

bootneckshuffle

Hi all

Been getting great advice off here lately, better than that of the likes of Step Change!

I have one more question though.

So, I have already posted on here about the joint account I have at Lloyds with my wife, this JA is used solely for bills, has no income into it and also is not associated with any of my credit card debts. That said, MBNA is Lloyds Banking Group, so the advice here is to ditch that joint account and anything where Lloyds could start dipping into money at will, to try and recover money for the MBNA debts.

The next issue is this however. I also have a business account with Lloyds, both my wife and I have cards for this account but of course the account is in the business name. Surely, Lloyds to do have the right to just start dipping into that just cos my name is attached to it? This is a business account so the funds that go into it belong to the business.

EssexHebridean

I’m not certain of the answer but can you clarify whether the account is in the name of your business, or styled as “Joe Bloggs trading as ……” as that MAY be relevant. 

It should be added that setting off isn’t something that banks do often, but it is something they have the right to do, so the advice to be wary of it is “better safe than sorry” really. My gut feeling is that an account like your joint account would be an unlikely target for them if, as it sounds, it’s funded and then money goes almost straight out again, and it doesn’t maintain any sort of surplus balance. 

bootneckshuffle

Thanks for the input and you're absolutely right about how the JA is operated.
Yes, it's in joint names of my wife and I but it has exact same amount added every month to cover monthly bills DD. I had read other threads on here from people claiming that their bank HAD dipped straight into their joint accounts and helped themselves to funds in there, that had been operated as a bills account like my own.
The advice on another post, was the "better safe than sorry" approach, which I totally get.
Step Change advised speaking to directly to Lloyds and asking them what they would do with regards to the JA.
I can't see Lloyds going anywhere near the business account, as it's in the business name and monies that go into there are monies belonging to the business, not me personally.

Kim_13

My instinct is that they can’t touch the business account if it is a limited company, since the company is a separate legal entity and does not owe them money. Legally, the separation between the funds of yourselves and any other business isn’t there. In any case, I agree that it’s better to be safe than sorry (Lloyds would likely decline you for any sort of business funding due to the internal record, where another group may not) but it’s obviously more urgent to get the funds out of there if the business isn’t a limited company.

bootneckshuffle

Thanks, it is a limited company yes.
Still in two minds about the joint account.
Part of me says they won't touch it, another says they may.
Like a few say on here, better safe than sorry and try to stay one step ahead of them.

Kim_13

bootneckshuffle said:

Thanks, it is a limited company yes.
Still in two minds about the joint account.
Part of me says they won't touch it, another says they may.
Like a few say on here, better safe than sorry and try to stay one step ahead of them.

Section L says they can do this: https://www.lloydsbank.com/assets/media/pdfs/current-accounts/personal_banking_terms_and_conditions.pdf

In practice I suspect they would be limited to 50% of the funds in a joint account, since that is how funds in such an account are apportioned in law, and the card debt is not your wife’s.

Definitely move the joint account ASAP.

bootneckshuffle

Thank you so much.
I had been looking online for info on this but had failed to find it, so thanks.
Such a sh**ty state of affairs to find myself in, have always been decent with debts and payments but as with many others, current economic climate, post-covid and creditors just blasting as much interest as they possibly can on the balances, has led me to this point.
I suppose the best approach here, is to not sit and dwell on it but to instead have a plan in place, backed by decent advice from places like this and then move on with my life.

EssexHebridean

On the business account, as I now understand it it will depend on the terms of the individual account  so you would need to check on that. I assume that the business qualifies as a small business? If so and you are a member of the FSB then their legal service could be very helpful on this one. 

On the joint account, personally I would be looking to move it elsewhere, although as far as I can think there would be no reason why this couldn’t be a switch to an account which pays an incentive to do so allowing that presumably there are no DDs set up on that account relating to the debts? So although switching would be a pain, it could at least be done via the current account switch service AND earn you a bit of cash in the process. 

bootneckshuffle

Thanks again.
I've already opened a new account for the DD's and I will move them manually (don't want to leave any tracks behind me) 
Correct, none of the DD's are debt related
I'm not a member of the FSB and to be honest, the more I think about the business account, the more I think they cannot touch it and even if they did, I'd hammer them legally. The account is a limited company account in the name of the company itself, invoices are paid into it from clients, only DD's attached to it are the company car and thats it

bootneckshuffle

Had a good look at this, can't see anything in there about the bank being allowed to dip the business account

https://www.lloydsbank.com/assets/assets-business-banking/pdfs/bb62571a5.pdf

Also, found the MBNA CC terms, again I can't see anything in there that states they can dip into any Lloyds related accounts to set off the CC debt, unless I have missed something glaringly obvious

https://www.mbna.co.uk/assets/pdfs/terms-and-conditions/general-credit-card-terms-and-conditions.pdf

sourcrates

When can right of offset be used with joint accounts?

When it comes to joint bank accounts or joint debts, right of set-off can be used to transfer money:

• From your sole bank account to debt only in your name
• From your sole bank account to a debt you have jointly
• From your joint bank account to a joint debt, if the same two people are named

Right of set-off cannot be used to transfer money:

• From your joint account to a sole debt in your name
• From your joint account to another joint account you have with a different person

Some banks say in their terms that money can be transferred between any accounts in your name.

This is likely to be considered an unfair term.

Make a complaint if the bank takes money from a joint account for a sole debt.