Exercising the Right of Setoff Against Deposit Accounts
When a borrower defaults, can your institution lawfully reach into a deposit account to satisfy the debt? Exercising the right of setoff requires precision, compliance, and a clear understanding of both legal and contractual boundaries. This webinar will delve into the legal requirements that must be satisfied, the procedural steps to follow before applying deposit funds to past-due loan amounts, and the risks of missteps.
KEY WEBINAR TAKEAWAYS
- Legal requirements that must be satisfied before your institution is permitted to exercise the right of setoff
- Contractual right of setoff versus common law right of setoff
- Distinguishing the right of setoff from the foreclosure of a security interest, and when it is best to use which method
- Situations when your institution can set off without violating the legal rights of other parties
BONUS MATERIALS
- Checklist of items that must be satisfied before right of setoff is permitted
WEBINAR DETAILS
Your institution has a common law right to set off a depositor’s account for a debt the depositor owed to your institution, provided certain legal requirements are met. In addition, your institution may have a contractual right of setoff, depending on the specific language in its deposit agreements. A debtor defaulting on a loan raises the critical question of when the institution may apply funds from the debtor’s deposit account to past-due loan amounts. This webinar will explain the legal requirements that must be satisfied, and the specific steps the institution must take, before exercising the right of setoff. We will also examine what happens when an account has multiple owners as well as how to manage accounts subject to garnishment by other creditors.
