Defalcation

In its usual context, defalcation is a term used to describe a kind of public official embezzlement or misappropriation of public funds. The Reagan era Iran-Contra affair, in which Lt. General Oliver North headed an operation to route arms sale funds from Iran to the Nicaraguan Contras, can be deemed an example of defalcation.

In a technical sense, a defalcation is a combination of separate debts to create a singular debt. This can become legal with the consent of all parties concerned.

For example, if Joe owes Pat $65 but Joe buys Pat a movie ticket for $15, he owes Pat a net $50 if Pat consents to accept the movie ticket and agrees to applying it to the outstanding debt.

And yes, of course, there's the definition for a very similar-sounding word. But we really don't need to, um, "go" there.