How can I avoid right of set-off?
If you’ve fallen behind with any of your debts, try to make sure you’re not using a bank account with any of your current creditors. This may mean opening a new basic bank account with a bank not linked to any of your debts.
If you can’t change bank account straight away, or if it’ll take you some time to arrange for your wages or benefits to be paid into your new account, explain to your existing bank that you’re in financial difficulties. Once you’ve told them this, they have to take it into account when deciding whether to use set-off.
If you live in England or Wales, you could use your ‘first right of appropriation’ to prevent the bank using their right of set-off. This means writing to your bank before your wages or benefits are paid in, listing or ‘earmarking’ what the money is going to be used for.
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.