Setoff

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Setoff

Money held on behalf of a borrower that may be applied to repay the loan, but usually without the permission of the borrower.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
(165) In effect, the stuff of the prohibited setoff
The issue, then, became whether the contractual discount constitutes a "payment made" on the plaintiff's behalf, and thus a collateral source subject to setoff. (28) To determine whether the contractual discount is a "payment," the court referenced Webster's Dictionary.
Nor is there typically a post-verdict reduction or setoff for any such collateral benefits received.
The IRS further asserted that BC section 553 preserved the IRS' right to setoff under IRC section 6402(a).
[W]e hold that when an accident victim is covered by more than one insurance policy providing underinsured-motorist coverage, public policy permits only one setoff to that coverage for the amount of workers' compensation benefits received by the insured.
Banks jealously guard the common law right of setoff. If a bank has received a restraining notice from a judgment creditor, does the creditor violate it by declaring the setoff?
If the marital settlement agreement is silent regarding credits and/or setoffs, then there is no entitlement at the time that the marital home is sold.
deducted as setoffs from the trebled damage award that would be payable
However, the creditor could significantly enhance its recovery when the debtor and creditor do business together and have accounts payable to each other that give rise to mutual claims and the right of setoff.
"Policies" may refer, as in the OECD Guidelines, to government policies.(49) And "assumptions" presumably relate to a description of the economic environment in which a taxpayer operates, as well as other matters that could affect the compilation of relevant data over multiple years for comparison purposes, the utilization or other effects of losses with reference to pricing and the significance of deliberate setoffs, to result in overall arm's length income that in transactional terms departs from the arm's length principle.(50)
We saw in a prior section that when the creditor has an execution lien, advance payment of a contingent debt relieves the garnishee from the obligation to pay the sheriff, since Debtor and Creditor Law section 151 invites triangular setoffs at the sheriffs expense.