What Does ''Recoupment'' Mean ?

"Recoupment" allows a defendant to reduce the amount of a plaintiff's claims by asserting a counterclaim which arose out of the same transaction. See Matter of Kosadnar, 157 F.3d 1011, 1013 (5th Cir. 1998). There are two general requirements for recoupment: (1) some type of overpayment must have been made; (2) both the creditor's claim and the amount owed the debtor must arise from a single transaction. See id. Money recouped by creditors from an amount owed a debtor post-petition is not subject to the automatic stay because funds subject to recoupment are not considered the debtor's property. See In re Malinowski, 156 F.3d 131, 133 (2d Cir. 1998). The typical recoupment situation involves a credit and debt arising out of a transaction for the same goods or services. See id.