I received an offer for the above amount today. However they are insisting that they transfer the funds into the account that I accrued the charges on, is this legal? They refuse to transfer it to my account at another bank and point black refuse to issue a cheque.

I signed a Trust Deed(similiar to an I.V.A.) a number of years ago and the account that I accrued the charges on was included in the Trust Deed, therefore the account is still open but with Credit Management Department (RBOS) who will not allow any customer transactions but they are going to reduce the amount that we owed by the offer amount once transferred. As the debt amount at the time was covered by the trust deed are they allowed to do this?

Please help urgently as I need to respond within 7 days.

What does the Trust Deed have to say about "windfalls"?

Ordinarily the bank would indeed be entitled to use the monies from the refund to offset any debts you may have with them.

I am obligated to notify the Trustees of any change in income, not the bank,.

Does this mean I am snookered and this is why they offered the full amount so easily because they know i wont be able to get a penny.

Basically yes you are snookered!

I'm not sure if they can adjust the amount but I imagine the bank will try and notify the trustee that the original amount owed has been reduced, this will reduce the amount owed in total by the trust but I assume it was unlikely that you would have paid enough to cover the whole amount so this does not really help.

It may be better to ask your trustee to intervene and insist the money goes into the trust and not just the banks pocket. Trust are governed by very complex set of rules so I would suggest you notify your trustee and see if they can help after all they are supposed to work for the benefit of all parties you included.

Sorry I can't deliver any better news but I have been there myself and know how it feels.

Cheers