Debtor/creditor set-off

Debtor/creditor set-off

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Client is owed say £5000 from a customer

Customer is also a supplier, my client owes them say £500 - however, the supplier factors thier debts.

My client being hassled by factor for payment, but word on the street is supplier in deep financial doo-doo.

My client obviously doesn't want to increase their exposure to £5500, what is the legal position?

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By johngroganjga
01st Oct 2014 16:26

If the debt is literally factored I think your client will find that his creditor in the full legal sense of the word is the factoring company, so the question of set off no longer arises, as the debtor and creditor, despite appearances, are now two different and unconnected entities.  I hope for your client's sake that my analysis is incorrect. 

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