Setoff


Also found in: Dictionary, Thesaurus, Medical, Legal, Encyclopedia.

Setoff

Money held on behalf of a borrower that may be applied to repay the loan, but usually without the permission of the borrower.

Setoff

1. The ability of a debtor to reduce the amount of one's debt by an amount the creditor owes to the debtor. Thus, if a debtor owes a creditor $20,000 but the creditor owes the debtor $5,000 in an unrelated matter, setoff allows the debtor effectively to owe only $15,000.

2. In banking, the right of a bank to seize a debtor's account balance held at that bank if a debt is in or near default. Some jurisdictions limit the right of setoff; for example, the United States does not allow it to apply for commercial loans or credit card debt.
References in periodicals archive ?
In the SemCrude Chapter 11 proceeding, the question of triangular setoff was discussed.
If a creditor whose setoff is prohibited by article 40 is owed a priority debt in the bankruptcy case and also owes money to the debtor (which could support a setoff if not prohibited), the People's Court must authorize the setoff if the value of the priority debt owing to the creditor exceeds the value of the debt owed to the debtor.
501) As for the manifestation of the setoff, this was rightful under Debtor and Creditor Law section 151:
58) Accordingly, Standard had to assert the defense of recoupment to recover against Terry's suit for future, post-petition benefits because the mutuality requirement for setoff was not met.
41) In the same vein, it would be improper to allow a setoff post-verdict because it is contrary to [section] 786.
57) Where there is a post-verdict reduction, it is common that there is a setoff for any costs or premiums paid by, or on behalf of, the plaintiff to obtain the collateral benefits.
T]he government cannot setoff payments owed to [plaintiff], a subcontractor and third party beneficiary, with debts owed by [the] prime contractor .
Court of Appeals for the Fifth Circuit analyzed the IRS' right to setoff in the context of a debtor's bankruptcy proceeding, and came to a decision with significant consequences.
D'Angelo requested that the trial court setoff the amount of the verdict by the amount of the settlement that the plaintiff received from the hospital.
70, presumably by allowing GEICO a setoff for benefits previously paid (the arbitration award was silent on this point) as well as deducting allowable expert witness fees.
The following required policy amendment appeared in an Industrial Development Agency's lease agreement: "Each policy shall waive any right of subrogation of the insurers there-under against any person insured under such policy, and waive any right of the insurers to any setoff or counterclaim or any other deduction, whether by attachment or other-wise, in respect of any liability of any person insured under such policy.