What is a Bank Set Off?

When can a bank take your money from you? That is an important question to ask, especially if you are at the point when bankruptcy can seem like a very real option. While in some cases it’s entirely legal – and very possible – for a bank to remove money from your account, it’s also a process that’s very heavily regulated. One of the topics you might want to cover in your next discussion with a Brooklyn bankruptcy attorney is the possibility of a bank setoff.

A bank setoff is the legal term for a process by which a bank takes money out of your deposit account in order to pay a fee that you owe to that bank. The simplest type of setoff is one that most people know as an overdraft charge. In other cases, though, a bank may be able to remove money from your account in order to cover a loan payment that you’ve missed. This can be problematic, especially if you’re intending to use that money for something else.

A bank cannot simply use a setoff whenever it feels like it, though. You typically have to authorize the bank to be able to do a setoff for a late credit card payment, for example, and in many cases a bank can’t take money from certain types of income (SSI, etc) in order to do a setoff. In these cases, you will need to show that the bank’s actions violated the law.

Call a Brooklyn Bankruptcy Attorney

If you’re having trouble with bank setoffs, it’s usually a very good idea to contact an attorney. Working with a Brooklyn bankruptcy lawyer might be the first step to helping you to get past these incidents and move on with your bankruptcy process. Remember, there are cases in which a bank may use a setoff to recoup funds, but you still have a right to be protected from unlawful setoffs. If you’re working towards getting your financial footing, you deserve to have all of the protections of the law. Contact us today!