N.Y. Debtor & Creditor Law § 192

§ 192. Set-off of mutual debts or credits. Where mutual credit has\nbeen given by any debtor, except a debtor proceeding under the fifth\narticle of this chapter, and any other person, or mutual debts have\nsubsisted between such debtor and any other person, the trustees may set\noff such credits or debts, and pay the proportion or receive the balance\ndue. But no set-off shall be allowed of any claim or debt, which would\nnot have been entitled to a dividend as hereinbefore directed.\n