How can I avoid right of set-off?
If you’ve fallen behind with any of your debts, contact your bank as soon as possible. Explain to them that you’re experiencing financial difficulties and find out what help they can offer you. If your bank can’t help, consider switching your account to a new basic bank account with someone you don’t owe money to.
Even if your bank can’t help, once they know you’re experiencing financial difficulties, they should give you between four to six weeks to deal with your situation. This should give you enough time to set up a new account and arrange to have your wages or benefits paid into it.
Although it’s uncommon for banks to use right of setoff, especially if they know you’re in financial difficulty, if you live in England or Wales you could use your ‘first right of appropriation’ to prevent the bank taking your income it.
This means writing to your bank before your wages or benefits are paid in and listing or ‘earmarking’ what the money is going to be used for. However, they should always leave you with enough money to cover essential bills.
Your bank can’t use right of set-off if you’ve specified that the money has been earmarked for your essential living costs or priority bills. We have an example letter to help you do this.
What can I do if right of set-off has already been used?
If money has already been taken you should contact your bank straight away and explain your circumstances. If you’re not left with enough money to cover your essential living costs or priority debts ask your bank to refund some or all of the money to your account. If the bank won’t do this, you can make a complaint.
Losing money through right of set-off is a warning sign that your debt problems are serious. We recommend you contact us for advice as soon as you can.