Debt Relief Seekers Be Prepared; How safe is Your Money in Your Own Checking Account

by Jason Call
Right of offset isn't a newfangled process that the banks use to collect on delinquent accounts; it's simply a term that is now heard more often because so many people are in credit card debt up to their ears and unable to keep up with their payments. Consumers using debt relief options such a debt settlement are hearing that phrase over and over again, with a caution attached.

If you deposit funds into a bank where you have a car loan, credit card, mortgage or any other debt, you likely have what's called a "banking conflict". You are housing assets where you also have liabilities and more often than not, the "right of offset" will apply. This means that if you have a depository account with funds available and for some reason cannot or do not pay these bills, the depository institution may have the legal right to freeze and seize any funds available to offset monies due to them. Even if you are participating in a debt settlement program, trying to reach an agreement with your creditors, they will seize that they can and then negotiate on the balance. You may be at risk.

While all banking institutions, as permitted by state law, have the "right of offset" and may use it to collect on delinquent secured loans, i.e. automobile loans, not all institutions may collect on unsecured or open-ended revolving accounts. For example, federally chartered banks, such as Bank of America, Wells Fargo, J.P. Morgan Chase, etc. may not use "right of offset" to collect on delinquent credit card debt balances, but federally or state chartered credit unions have the freedom to do so. The important thing to remember is that if you are unsure of your banks policy or practices with regard to "right of offset", it is very important that you pull out those contracts and read the fine print. If there is any question, MOVE YOUR MONEY. It doesn't take much effort to change who you bank with, but the effort to get your money back when things go very wrong will be overwhelming and more often than not, you will just be out of luck!

This means that if you surrender a vehicle that you can no longer pay for and you bank with the company that owns your loan, every dime that you have deposited in that institution is at risk of disappearing at any moment, without notice. In most cases, notice was given in the loan paperwork that you originally signed with the bank. If you are like most consumers, you most likely over viewed that document rather than reading from top to bottom.

Get back to basics. Never bank with financial institution that you owe money. You know what they say about best intentions and best laid plans. Life happens and when it does, you want to be prepared. Debt Settlement is by far the most economical and expeditious way to eliminate credit card debt. Have your ducks in a row and protect your investments before entering into any debt relief or debt settlement program.

About the Author

Jason Call
Senior Vice of Operations
NationalDebtResolution.com