The setoff is an obscure legal provision most often applied in civil lawsuits. But in the context of consumer bankruptcy, it allows a moneylender to seize funds out of a consumer’s bank account.
There are many situations in which the setoff may apply, but the most common one is when a consumer simultaneously has money in and owes money to the same bank. For example, assume that you have a checking account with Bank A. Assume that you have an outstanding balance on a credit card issued by Bank A. Bank A can take money out of your checking account to satisfy the outstanding balance.
The Automatic Stay
The good news is that the automatic stay prevents the moneylender from exercising its rights to setoff, although the moneylender may be able to temporarily circumvent the automatic stay.
The setoff, and other obscure bankruptcy provisions, have caught many consumers off guard. The professionals at Henley and Henley take pride in the amount of attention devoted to each bankruptcy client. Nothing, and no one, will be allowed to fall through the cracks. Call today for your free consultation.