Right to Offset
One of the most important things to do when you are in debt is to change your bank account. If you owe money to the same bank that your wages or other income is paid into then they are entitled to apply the Right to Offset.
The Right to Offset means that your bank is entitled to take any income in your bank account to offset against any debt you owe them. If you are looking to enter a Debt Management Plan, Individual Voluntary Arrangement, Bankruptcy, a Debt Relief Order or a plan of your own then it is extremely important you change your bank account.
Once a creditor is notified that you are entering into a plan, or are not going to be keeping up with the contractual payments, then they are more likely to try and exercise this right.
When choosing a new bank it is important that you change to one that is not connected to any of your creditors. Lots of ‘big’ banks are connected to each other or to other credit providers, so it is always best to check first. Here are a few examples…
Santander Group:
- Abbey
- Alliance and Leicester
- Cahoot
- GE Capital – eg Topshop store card, Debenhams store card etc…
Lloyds Banking Group:
- Bank of Scotland
- Halifax
- Lloyds TSB
- Intelligent Finance (IF)
- Sainsbury’s Finance etc…
Royal Bank of Scotland Group:
- Royal Bank of Scotland
- Natwest
- Tesco Personal Finance
*all of the above information was correct at the time of publishing.
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Comments 12
Please can you help i work fulltime but just cant seem to clear all my bills i am getting deeper into debt paying bank charges and interest often going without food to try and pay off what i owe. I am feeling desperate and ashamed that i am asking you to help but this is seriously affecting my health.
Caroline
Hi Caroline, if you would like our help then please call our helpline on 0800 2945205 we are open until 9pm this evening and we are here tomorrow between 9am and 3pm. Or you could fill in our online referral form http://www.payplan.com/debt-help/ and we will call you back.
l borrowed £750 from payday uk and l have been paying back £175 every month since November last year and the balance is not going down. how can l stop this immediately?
if l change my bank account will l not get calls from my creditors at work looking for me? l can’t pay that amount anymore.
Hi Gerald, it sounds as though you are struggling with your debt repayments so I would recommend that you call us on 0800 2945205 or fill in our online referral form http://www.payplan.com/debt-help and we will go through things with you in more detail.
If you change banks and stop making payments to your creditors then they will most probably chase you for payment. If you cannot afford the full payment then you could write to each of them and make a reduce payment.
If your creditors are calling you at work then you can tell them that you want them to remove that number from there database and only contact you via letter or on your personal mobile or landline.
Hope this helps.
Gemma
I have a CCJ can what bank will let open a new account ?
Hi Michelle. By law all banks must offer you a basic bank account. However you may find that you will only be issued with a cash card as apposed to a debit card. Make sure that you go to a bank that isn’t connected to any of your creditors.
Many Thanks
Gemma
When i had to change my bank account, i found that most banks do a credit check before opening an account, this due to my debts they refused to open one.
The only one that was very helpful was Nationwide, they
listened to my problems, opened a basic account, took care of the changeover from my other account, and after
3 years of keeping it in credit issued me with a debit card.
I hope this helps other people trying to open a new bank account.
Allan
do banks have Right to Offset even after IVA?
Hi Ginni,
Unfortunately banks can reserve the right to offset the PPI after an IVA.
Hope that helps, but please contact us if you require any further information or assistance.
Kind regards,
Samuel
Hi, I have an old credit card debt with Lloyds – I pay a small amount to them each month which is a token amount but it is all I can afford. I have closed my RBS current account because they were hopeless and have opened a TSB account – Is my money safe from Lloyds? I have read elsewhere (Consumer Forums) that Lloyds and TSB will not exercise their right to off set between each other as TSB prepares to float and leave the same banking group this summer. It states this in terms and conditions here – http://www.lloydstsbtransfer.com/global/lloyds_nov_june2013.pdf
Gerard
Hi there, I’ve just opened an RBS basic account after they closed my last one. It’s been open for a week and they have wrote to me to tell me that they are closing it.
I have £3700 overdrawn my £2300 limit in my current account, however it has had ongoing complaints for over two years and they have ignored resolving it despite numerous promises and simply sent it to collections.
This is seriously affecting my livelyhood, I work every day up to 16 hours a day, what can I do to stop them doing this?
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