Right to Offset

Written by Payplan Ryan on 2 May 2012

One of the most important things to do when you are in debt is to change your bank account. If you owe money to the same bank that your wages or other income is paid into then they are entitled to apply the Right to Offset.

The Right to Offset means that your bank is entitled to take any income in your bank account to offset against any debt you owe them. If you are looking to enter a Debt Management Plan, Individual Voluntary Arrangement, Bankruptcy, a Debt Relief Order or a plan of your own then it is extremely important you change your bank account.

Once a creditor is notified that you are entering into a plan, or are not going to be keeping up with the contractual payments, then they are more likely to try and exercise this right.

When choosing a new bank it is important that you change to one that is not connected to any of your creditors. Lots of ‘big’ banks are connected to each other or to other credit providers, so it is always best to check first. Here are a few examples…

Santander Group:

  • Abbey
  • Alliance and Leicester
  • Cahoot
  • GE Capital – eg Topshop store card, Debenhams store card etc…

Lloyds Banking Group:

  • Bank of Scotland
  • Halifax
  • Lloyds TSB
  • Intelligent Finance (IF)
  • Sainsbury’s Finance etc…

Royal Bank of Scotland Group:

  • Royal Bank of Scotland
  • Natwest
  • Tesco Personal Finance

*all of the above information was correct at the time of publishing.

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This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

12 thoughts on “Right to Offset”

  • Caroline Hannon

    May 10, 2012 at 5:53 pm

    Please can you help i work fulltime but just cant seem to clear all my bills i am getting deeper into debt paying bank charges and interest often going without food to try and pay off what i owe. I am feeling desperate and ashamed that i am asking you to help but this is seriously affecting my health.

    Caroline

    Reply Report comment

    • Gemma

      May 11, 2012 at 10:30 am

      Hi Caroline, if you would like our help then please call our helpline on 0800 2945205 we are open until 9pm this evening and we are here tomorrow between 9am and 3pm. Or you could fill in our online referral form http://www.payplan.com/debt-help/ and we will call you back.

      Reply Report comment

  • gerald

    June 12, 2012 at 2:16 pm

    l borrowed £750 from payday uk and l have been paying back £175 every month since November last year and the balance is not going down. how can l stop this immediately?

    Reply Report comment

  • gerald

    June 12, 2012 at 2:36 pm

    if l change my bank account will l not get calls from my creditors at work looking for me? l can’t pay that amount anymore.

    Reply Report comment

    • Gemma

      June 12, 2012 at 3:09 pm

      Hi Gerald, it sounds as though you are struggling with your debt repayments so I would recommend that you call us on 0800 2945205 or fill in our online referral form http://www.payplan.com/debt-help and we will go through things with you in more detail.

      If you change banks and stop making payments to your creditors then they will most probably chase you for payment. If you cannot afford the full payment then you could write to each of them and make a reduce payment.

      If your creditors are calling you at work then you can tell them that you want them to remove that number from there database and only contact you via letter or on your personal mobile or landline.

      Hope this helps.

      Gemma

      Reply Report comment

  • michelle

    June 18, 2012 at 10:42 am

    I have a CCJ can what bank will let open a new account ?

    Reply Report comment

    • Gemma

      June 18, 2012 at 12:34 pm

      Hi Michelle. By law all banks must offer you a basic bank account. However you may find that you will only be issued with a cash card as apposed to a debit card. Make sure that you go to a bank that isn’t connected to any of your creditors.
      Many Thanks
      Gemma

      Reply Report comment

  • Allan Pape

    July 27, 2012 at 9:07 am

    When i had to change my bank account, i found that most banks do a credit check before opening an account, this due to my debts they refused to open one.
    The only one that was very helpful was Nationwide, they
    listened to my problems, opened a basic account, took care of the changeover from my other account, and after
    3 years of keeping it in credit issued me with a debit card.
    I hope this helps other people trying to open a new bank account.
    Allan

    Reply Report comment

  • Ginni

    January 13, 2014 at 5:36 pm

    do banks have Right to Offset even after IVA?

    Reply Report comment

    • Samuel

      January 23, 2014 at 4:38 pm

      Hi Ginni,

      Unfortunately banks can reserve the right to offset the PPI after an IVA.

      Hope that helps, but please contact us if you require any further information or assistance.

      Kind regards,

      Samuel

      Reply Report comment

  • Gerard

    February 7, 2014 at 1:38 am

    Hi, I have an old credit card debt with Lloyds – I pay a small amount to them each month which is a token amount but it is all I can afford. I have closed my RBS current account because they were hopeless and have opened a TSB account – Is my money safe from Lloyds? I have read elsewhere (Consumer Forums) that Lloyds and TSB will not exercise their right to off set between each other as TSB prepares to float and leave the same banking group this summer. It states this in terms and conditions here – http://www.lloydstsbtransfer.com/global/lloyds_nov_june2013.pdf

    Gerard

    Reply Report comment

  • Clark

    July 30, 2014 at 11:37 pm

    Hi there, I’ve just opened an RBS basic account after they closed my last one. It’s been open for a week and they have wrote to me to tell me that they are closing it.

    I have £3700 overdrawn my £2300 limit in my current account, however it has had ongoing complaints for over two years and they have ignored resolving it despite numerous promises and simply sent it to collections.

    This is seriously affecting my livelyhood, I work every day up to 16 hours a day, what can I do to stop them doing this?

    Reply Report comment

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