• Banks Can Take Your Money Without Asking - How a Right of Offset Works

    By Richard G Cooper

    The collection of debt is a stressful event. Phone calls, nasty letters and constant threats of legal action are often enough to drive you crazy. Creditors have a trick up their sleeve that most people don't know about, and when it happens it's even more disastrous then an irritating bill collector phone call.

    The person in debt to the bank often calls it stealing money. The creditor calls it a right of offset. And it's perfectly legal. A right of offset can be described as: a banks legal right to seize funds that a debtor may have on deposit to cover a loan in default.



    In Canada, it happens quite often, and people in debt to their bank are frequently left wondering how they are going to account for this money and get it back. Having money offset from your bank account when your rent or mortgage payment is due can be extremely stressful.

    Creditors can take money out of your bank account and in some cases without asking your permission if you are sufficiently delinquent in your payments on a credit card or loan to them. Most of the big banks in Canada have the concept of a right of offset written into their credit card and loan agreements. It's a level of protection you usually give them when you sign for and borrow unsecured money from your bank in the form of a credit card or loan.

    Most people are oblivious to this fact and when a regular paycheque goes into your account, it can disappear as quickly as it arrived. Remember your bank can view your cycle of deposits and withdrawals, so they know when to go in and get their money back.

    Can you get the money back? Sometimes, the bank will work with you and return it if you can talk to the right person. Your branch manager or the banks Ombudsman can help. But they usually don't have to. There are also in some cases certain restrictions on the types of deposits that can be offset from your account. You should also be aware that if you owe bank "A" a balance on a credit card, they cannot offset money out of an account from bank "B". The account has to be with the same financial institution.

    The best protection is not exposing yourself to having money offset from your bank account by staying up to date in loan and credit card payments. But for some people this is not a reality. I know first hand that bad things do happen to good people and that most folks who end up in debt did not intend for it to happen.

    There are further steps you can take to protect yourself, not depositing new money into an account you owe credit card or loan debts is a start. But this is not a solution to debt. Seek help from a reputable debt settlement company if you are drowning in debt, and not able to deal with it. But do something today!

    Richard Cooper is Founder & CEO at Total Debt Freedom Inc. Canada's most respected debt settlement company. Total Debt Freedom offers debt settlement plans that can save you 50-70% of what you owe and get you debt free in 1 - 3 years.
    www.totaldebtfreedom.ca




 
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4 Comments
On Mar 1, 2011, af Said:
Hi I recently filld for a consumer proposals, one of my creditors cibc visa went into my cibc cheq account and withdrawl all the remaining funds to help cover some cash owning on the card which is in collections. Are they allowed to do this 1 month after i filled proposal?
I am not sure if cibc has approved or declined my proposal but they for sure got notice just like my other crediors.
On Jan 2, 2010, corey laurine brunskill Said:
Some creditor has taken money out of my account and I am on odsp and they took only part not even the whole amount which I find very strange because why would they only take alittle and not the whole amount , there has never been an agreement between us so how can this have happened. I thought they are not allowed to do this and it is from a Cash Store and I never said they could at the bank , and the amount is strange , don't they go for the whole thing when they have only one check and there is no check number or anything like that. Can you please help me on this issue I am freaking because of it and can't get any help today. I am getting help from family but am also going to the bank on Monday to find out all the details.
On May 8, 2009, Babs Said:
I am clearly appreciative of the service and opportunity to debrief reguarding the CIBC banks right of offset, on your site. I have a ten year outstanding loan that is just past it\'s life expectancy on my credit rating. I declared bankrupcy in 2002 while on ODSP as I was trying to recover from cancer. Recently I returned to work only to suffer a severe heart attack and now I remain on ODSP(cpp) permanantly. Yesterday CBV collections took my last $117.00 for this months food which is the first time in seven years anyone from CIBC has attempted to collect, despite them having my updated address, phone no., bankrupcy discharge & account info for over seven years. Try to tell me that\'s not the same as \"robbing from the poor to pay rich\". Banks are ruthlessly greedy and out of control what with their high credit card interest rates (loan sharking), floating morgages and monthly bank charges. It\'s not a wonder past generations hid their monies in the mattress ect. to keep the bank\'s power seeking mongers, in check. It\'s time the masses became empowered and revolted against the bank\'s corpoate corruption by systematically withdrawing all their life\'s savings, and reclaiming the value and overall monetary power that\'s was rightfully the peoples all along. Monies were originally given on loan and in good faith to emerging banks to be recirculated with the clear understanding that it could not be used or abused for personal or corporate gain beyond reasonable market interest rates either then or in the future, and/or by any members or affiliates(credit co.\'s) of the banking industry.
The Bank Apple has definately fallen completely out of range of the original nuclear Banking Tree on this one. We the people and the last of the baby boomers are the only ones left who can make a viable impact on stopping this financial corruption and ultimately making a better future for our kids.
On Mar 10, 2009, John Smith Said:
I have credit debt to several banks but managed to keep my credit in good conditions with my own bank. I just got some money from the Government and deposited it into my bank account, can the collection agencies from other banks offset the money from my bank account?
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