In real life, transactions between individuals or enterprises are becoming more and more frequent, and there are often mutual debts, and once a dispute arises, the parties often claim debt offset. So can the debt be offset? What are the conditions for debt offset?
Is it feasible to advocate debt offsets?
On March 1, 2021, Li Lei borrowed 80,000 yuan from Han Meimei and issued an IOU, agreeing to repay the loan before October 1, 2021. Because Li Lei did not repay the arrears when due, he still refused to repay them after being urgedHan Meimei then sued Li Lei to the court, demanding that he return the loan of 80,000 yuan.
Li Lei argued that he did borrow 80,000 yuan from Han Meimei and had not returned it, but because there was still a lease relationship between the two parties, in May 2021, after Li Lei leased Han Meimei's rough house, he spent a total of 15,000 yuan on household items such as beds, wardrobes, and air conditioners, and the cost should be borne by the lessor, i.e., Han MeimeiIt demanded that 15,000 yuan be deducted from the loan.
The court held that this case was a private lending dispute, and the legal lending relationship was protected by law. According to the IOU submitted by Han Meimei and Li Lei's confirmation of the fact of the loan, Li Lei borrowed 80,000 yuan from Han MeimeiThe facts are clear and the evidence is sufficientto confirm this.
Regarding Li Lei's claim that the 15,000 yuan spent on the purchase of household goods should be deducted from the loan, because the two parties had not settled the expenses, and Han Meimei did not recognize itThere is no clear creditor-debtor relationship, which does not meet the premise of mutual debtNo statutory set-off appliesTerms. In the end, the court ruled in accordance with the law:Li Lei returned Han Meimei's loan of 80,000 yuan and rejected Li Lei's request for debt offset.
Conditions for the set-off of statutory debts
1. The parties owe debts to each other
Set-off and set-offMutual creditor's rights and mutual debts are the basic conditions for the establishment of debt offset。To put it simply, the creditor owes the debtor a sum of money, and at the same time the debtor owes the creditor a sum of money. In addition, there are two creditor-debtor relationships between the partiesMust be legally present。If any of them is an illegal debt, no set-off can be claimed.
2. The offsetting debt must be of the same type of payment
UsuallyPay in the same kind of currency or in kindIf the subject matter of the debt owed by the two parties to each other is different, if the set-off is allowed, it will inevitably make it difficult for one or both parties to achieve their purpose.
3. The active creditor's rights have reached the repayment period
The claim enjoyed by the party claiming the set-off is calledActive claims, the claim of the party being set off is calledPassive debt。Offsetting has the effect of mutual settlement, onlyThe active claim enjoyed by the party claiming set-off has matured, the parties can claim set-off, otherwise it is tantamount to forcing the debtor to repay early.
But there are exceptionsIn bankruptcy proceedings, the creditor's rights enjoyed by the bankrupt creditor can be set off regardless of whether the repayment period has expired.
4. Debts that may not be set off by law are excluded
Debts that cannot be used for set-off are roughly as follows:
1.No set-off in nature. For example, non-compete debts and other non-compete debts owed by both parties, debts for the provision of labor services, and debts that are inseparable from the person, such as pensions, retirement pensions, and child support.
2.The law provides for no set-off. Such as: debts that are prohibited from being enforced; debts incurred as a result of intentional tort; Debts that are agreed to be paid to a third party.
3.The parties have specifically agreed that set-off shall not be made.
Legal effect of debt set-off
The legal effect of debt set-off is mainly manifested in the following two aspects:
First, the extinguishment of the creditor's rights of both parties. When the amount of the creditor's rights of both parties is the same, all the creditor's rights enjoyed by the two parties or the debts owed by each other shall be extinguished; If the amount of the creditor's rights of the two parties is different, it shall be extinguished if they are equal.
Second, debt offsets are retroactive. From the time the set-off takes effect, it is equivalent to extinguishing the debt and no longer accruing interest; Liability for delay in payment will no longer occur; The damages and liability for breach of contract incurred by one party are also extinguished by the retroactivity of the set-off.
China's relevant laws stipulate that the right of set-off is sufficientExercise by way of notice, you can alsoRaise a defence or file a counterclaimway to exercise. As long as the conditions for the constitution of statutory set-off are met, the parties may exercise the statutory right of set-off at any time.
Debt offsetting is also a solution when you have a debt problem. But before considering debt offsets,It is recommended to consult Yichun Legal Protection Network (Shouxin Guolu) ** legal affairsUnderstand your legal rights and risks, comprehensively analyze the pros and cons, obtain professional legal guidance, find the most suitable solution, and protect your rights by sending a lawyer's letter to collect money or sue to avoid damage to your rights and interests.