Duncan v. First Heritage Bank of Loudon County (In Re Duncan)

MEMORANDUM

CLIVE W. BARE, Bankruptcy Judge.

In the present controversy the plaintiff/debtor asserts that the defendant improperly used her bank account as a setoff against a debt owed to the defendant. At issue is whether the defendant had the right to set off the deposits against an unmatured but delinquent installment debt, and if so, whether the setoff may be recovered by the debtor under 11 U.S.C. § 553(b), 1 § 522(g) and (h). 2

I

On February 16, 1980, the debtor borrowed $224.26 from the defendant, giving in exchange a promissory note in the amount of $240.72, payable in monthly installments…