What is a setoff action?

A setoff action is a legal procedure used by a creditor in California to obtain payment from a debtor. In this action, the creditor can take money that the debtor has on deposit in a bank account or other financial institution to pay for a debt the debtor owes to the creditor. In California, a creditor can file a setoff action if the debtor is behind on payments for more than 30 days. The creditor will file a setoff action in court and ask for a court order that would allow the creditor to take money from the debtor’s account to pay off the debt. The court order will be specific to the amount of money the creditor can take. There are limits to what money a creditor can take. In California, the creditor is only allowed to take money that the debtor has available to them in their account, like a checking or savings account, and not money that is in an escrow account or accounts with a cosigner. Once a setoff action is successful, the creditor has the right to take the money that was held by the debtor and pay off the debt to the creditor. The money taken must be equal or greater than the amount the debtor owes. Any remaining money will be sent back to the debtor.

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What is a setoff action?

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