Cite as: 516 U. S. 16 (1995)
Opinion of the Court
right under Maryland law to set off the defaulted loan against the balance in the checking account. It is also undisputed that under § 362(a) respondent's bankruptcy filing stayed any exercise of that right by petitioner. The principal question for decision is whether petitioner's refusal to pay its debt to respondent upon the latter's demand constituted an exercise of the setoff right and hence violated the stay.
In our view, petitioner's action was not a setoff within the meaning of § 362(a)(7). Petitioner refused to pay its debt, not permanently and absolutely, but only while it sought relief under § 362(d) from the automatic stay. Whether that temporary refusal was otherwise wrongful is a separate matter—we do not consider, for example, respondent's contention that the portion of the account subjected to the "administrative hold" exceeded the amount properly subject to setoff. All that concerns us here is whether the refusal was a setoff. We think it was not, because—as evidenced by petitioner's "Motion for Relief from Automatic Stay and for Setoff"—petitioner did not purport permanently to reduce respondent's account balance by the amount of the defaulted loan. A requirement of such an intent is implicit in the rule followed by a majority of jurisdictions addressing the question, that a setoff has not occurred until three steps have been taken: (i) a decision to effectuate a setoff, (ii) some action accomplishing the setoff, and (iii) a recording of the setoff. See, e. g., Baker v. National City Bank of Cleveland, 511 F. 2d 1016, 1018 (CA6 1975) (Ohio law); Normand Josef Enterprises, Inc. v. Connecticut Nat. Bank, 230 Conn. 486, 504-505, 646 A. 2d 1289, 1299 (1994). But even if state law were different, the question whether a setoff under § 362(a)(7) has occurred is a matter of federal law, and other provisions of the Bankruptcy Code would lead us to embrace the same requirement of an intent permanently to settle accounts.
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