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Corporate Debt

Debt Assignment: How They Work, Considerations and Benefits

Daniel Liberto is a journalist with over 10 years of experience working with publications such as the Financial Times, The Independent, and Investors Chronicle.

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Investopedia / Ryan Oakley

What Is Debt Assignment?

The term debt assignment refers to a transfer of debt , and all the associated rights and obligations, from a creditor to a third party. The assignment is a legal transfer to the other party, who then becomes the owner of the debt. In most cases, a debt assignment is issued to a debt collector who then assumes responsibility to collect the debt.

Key Takeaways

Debt assignment is a transfer of debt, and all the associated rights and obligations, from a creditor to a third party (often a debt collector).
The company assigning the debt may do so to improve its liquidity and/or to reduce its risk exposure.
The debtor must be notified when a debt is assigned so they know who to make payments to and where to send them.
Third-party debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA), a federal law overseen by the Federal Trade Commission (FTC).

How Debt Assignments Work

When a creditor lends an individual or business money, it does so with the confidence that the capital it lends out—as well as the interest payments charged for the privilege—is repaid in a timely fashion. The lender , or the extender of credit , will wait to recoup all the money owed according to the conditions and timeframe laid out in the contract.

In certain circumstances, the lender may decide it no longer wants to be responsible for servicing the loan and opt to sell the debt to a third party instead. Should that happen, a Notice of Assignment (NOA) is sent out to the debtor , the recipient of the loan, informing them that somebody else is now responsible for collecting any outstanding amount. This is referred to as a debt assignment.

The debtor must be notified when a debt is assigned to a third party so that they know who to make payments to and where to send them. If the debtor sends payments to the old creditor after the debt has been assigned, it is likely that the payments will not be accepted. This could cause the debtor to unintentionally default.

When a debtor receives such a notice, it's also generally a good idea for them to verify that the new creditor has recorded the correct total balance and monthly payment for the debt owed. In some cases, the new owner of the debt might even want to propose changes to the original terms of the loan. Should this path be pursued, the creditor is obligated to immediately notify the debtor and give them adequate time to respond.

The debtor still maintains the same legal rights and protections held with the original creditor after a debt assignment.

Special Considerations

Third-party debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA). The FDCPA, a federal law overseen by the Federal Trade Commission (FTC), restricts the means and methods by which third-party debt collectors can contact debtors, the time of day they can make contact, and the number of times they are allowed to call debtors.

If the FDCPA is violated, a debtor may be able to file suit against the debt collection company and the individual debt collector for damages and attorney fees within one year. The terms of the FDCPA are available for review on the FTC's website .

Benefits of Debt Assignment

There are several reasons why a creditor may decide to assign its debt to someone else. This option is often exercised to improve liquidity and/or to reduce risk exposure. A lender may be urgently in need of a quick injection of capital. Alternatively, it might have accumulated lots of high-risk loans and be wary that many of them could default . In cases like these, creditors may be willing to get rid of them swiftly for pennies on the dollar if it means improving their financial outlook and appeasing worried investors. At other times, the creditor may decide the debt is too old to waste its resources on collections, or selling or assigning it to a third party to pick up the collection activity. In these instances, a company would not assign their debt to a third party.

Criticism of Debt Assignment

The process of assigning debt has drawn a fair bit of criticism, especially over the past few decades. Debt buyers have been accused of engaging in all kinds of unethical practices to get paid, including issuing threats and regularly harassing debtors. In some cases, they have also been charged with chasing up debts that have already been settled.

Federal Trade Commission. " Fair Debt Collection Practices Act ." Accessed June 29, 2021.

Federal Trade Commission. " Debt Collection FAQs ." Accessed June 29, 2021.

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Debt Assignment and Assumption Agreement

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Debt Assignment and Assumption Agreement

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A Debt Assignment and Assumption Agreement is a very simple document whereby one party assigns their debt to another party, and the other party agrees to take that debt on. The party that is assigning the debt is the original debtor; they are called the assignor. The party that is assuming the debt is the new debtor; they are called the assignee.

The debt is owed to a creditor.

This document is different than a Debt Settlement Agreement , because there, the original debtor has paid back all of the debt and is now free and clear. Here, the debt still stands, but it will just be owed to the creditor by another party.

This is also different than a Debt Acknowledgment Form , because there, the original debtor is simply signing a document acknowledging their debt.

How to use this document

This document is extremely short and to-the-point. It contains just the identities of the parties, the terms of the debt, the debt amount, and the signatures. It is auto-populated with some important contract terms to make this a complete agreement.

When this document is filled out, it should be printed, signed by the assignor and the creditor, and then signed by the assignee in front of a notary. It is important to have the assignee's signature notarized, because that is the party that is taking on the debt.

Applicable law

Debt Assignment and Assumption Agreements are generally covered by the state law where the debt was originally incurred.

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You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.

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Assignment Of Debt Agreement

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What is an assignment of debt agreement.

An assignment of debt agreement is a legal document between a debtor and creditor that outlines the repayment terms. An assignment of debt agreement can be used as an alternative to bankruptcy, but several requirements must be met for it to work.

In addition, if obligations are not met under a debt agreement, it might still be necessary to file for bankruptcy later on. Therefore, consulting with an attorney specializing in debt agreements is always recommended before entering into one of these contracts.

Assignment Of Debt Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10 5 exhibit1024f10qsbmay04.htm EXHIBIT 10.24 , Viewed December 20, 2021, View Source on SEC .

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What Is an Assignment of Debt?

1 What Is an Assignment of Debt? The Legal Ins and Outs Explained
2 A Crash Course on Debt Assignments
3 Why Do Creditors Assign Debts?
4 The Debt Assignment Process 101
5 Your Rights When Debts Get Assigned
6 Potential Downsides of Debt Assignments
7 Tips for Dealing With Assigned Debts
8 Creditor Responsibilities With Assignments
9 The Secondary Debt Market Explained
10 Debt Bundling and Securitization Trends
11 Creditor Rights vs. Consumer Protections
12 When to Consult a Lawyer About Assignments
13 Avoiding Shady Debt Collectors
14 Pros and Cons of Debt Assignments

What Is an Assignment of Debt? The Legal Ins and Outs Explained

A crash course on debt assignments.

Ever heard of an “assignment of debt”? Yeah, it’s one of those legal terms that sounds pretty darn confusing. But don’t worry, I’m gonna break it down for you in a way that’s easy to understand. An assignment of debt is basically when a creditor (the person or company you owe money to) transfers or “assigns” your debt to someone else. So let’s say you owe cash to Bank A, but Bank A decides to sell your debt to Debt Collector B. Boom – that’s an assignment of debt right there. Now, you might be thinking “Wait, they can just sell my debt without asking me??” And the answer is…yup, they sure can! As long as they follow the rules, creditors have the right to assign debts to third parties. It’s all part of the fun world of debt collection. But don’t freak out just yet. There are some protections in place for debtors (that’s you!) when this happens. We’ll dive into those a bit later. For now, just know that debt assignments happen allll the time in the credit and lending world.

Why Do Creditors Assign Debts?

Good question! There are a few main reasons why creditors might want to offload your debt to someone else:

Cash Flow – Creditors like getting paid back ASAP. If you’re behind on payments, they may sell the debt to a collector who can hopefully get the money from you faster.
Reduce Risk – Holding onto unpaid debts is risky business. Assigning the debt transfers that risk to another party.
Operational Efficiency – Debt collection is a whole job in itself. Some creditors would rather outsource that headache.
Raise Capital – Selling debts raises cash that creditors can then reinvest in their businesses.

So in a nutshell, it basically comes down to improving cash flow, reducing risk exposure, focusing on their core business, and raising capital. For creditors, assigning debts just makes good financial sense in many cases.

The Debt Assignment Process 101

Okay, so when a creditor wants to assign your debt to someone else, there’s a little process they have to follow:

The Assignment Agreement – This is a contract between the original creditor and the debt buyer that lays out all the terms of the debt sale. It’ll specify things like the amount of debt being assigned, the purchase price, etc.
Notification – By law, the creditor has to notify you in writing that your debt has been assigned. This notice should include key details like the name of the new debt owner and instructions for making payments moving forward.
Debt Validation – If you request it, the new debt owner has to provide verification of the debt details, including the original creditor’s name and the amount you owe.
Account Transfer – Once all the paperwork is sorted, your account info and payment history gets transferred over to the new debt owner.

So in essence, an assignment agreement is signed, you get notified, the debt gets validated if needed, and then your account moves to the new creditor. Pretty straightforward process overall. Now, it’s important to note that the new debt owner (let’s call them the “assignee”) essentially steps into the shoes of the original creditor. They inherit all the rights and obligations related to collecting that debt from you. We’ll talk more about what that means for you as the debtor in a bit.

Your Rights When Debts Get Assigned

As a consumer, you’ve got some rights when your debt gets assigned to a new owner. Here are the key ones to know:

Fair Debt Collection Practices Act – This federal law prohibits debt collectors (including debt assignees) from using abusive, deceptive or unfair practices when trying to collect from you. So no threats, harassment or shenanigans allowed!
Debt Validation – As mentioned, you can request validation of the debt details from the new owner. They have to provide evidence that the debt is legit and you really owe it.
Statute of Limitations – There’s a time limit (set by state law) for how long a creditor can try to sue you over an unpaid debt. Assignments don’t reset or “re-age” this statute of limitations.
Payment History – Any payments you’ve already made should get credited to your account by the new debt owner. They can’t try to collect the full amount twice.
Interest Rate – The new creditor generally can’t jack up the interest rate above what you originally agreed to with the original lender.

So in a nutshell, debt buyers have to play by the rules just like original creditors. They can’t harass you, have to validate debts on request, can’t re-age old debts, and have to properly account for your payment history and interest rates. Of course, make sure you understand the specific debt collection laws in your state too. Those can provide extra protections beyond the federal stuff.

Potential Downsides of Debt Assignments

While debt assignments are totally legal, they’re not always a walk in the park for debtors. Here are some potential downsides to watch out for:

Aggressive Collectors – Let’s be real, some debt buyers play a little rougher than original creditors when it comes to collections. They may be more persistent in their efforts to get paid.
Debt Parking – Some shady debt buyers will intentionally “park” or withhold debts from the credit bureaus to try and catch you off guard later with a surprise collections effort.
Questionable Practices – There have been cases of debt buyers trying to collect inflated amounts, re-age old debts, or even collect debts twice. Gotta stay vigilant!
Restarting the Clock – In some states, simply getting assigned to a new debt owner can restart the statute of limitations clock, giving them more time to potentially sue you.
Debt Stacking – If multiple debts get bundled together and assigned, it can create one huge debt stack that’s harder to pay off.

The moral of the story? While there are laws in place, you gotta be a smart, informed consumer and not take any debt collector’s word as gospel – whether they’re the original creditor or not.

Tips for Dealing With Assigned Debts

So what should you do if one of your debts gets assigned to a new owner? Here are some tips:

Get it in Writing – Insist on receiving written validation of the debt details before acknowledging or paying anything.
Check the Records – Review your own payment records against what the new creditor is claiming you owe. Dispute any discrepancies.
Negotiate – Debt buyers often purchase debts for pennies on the dollar. Use this to your advantage and try negotiating a lump-sum settlement for less than face value.
Consult a Lawyer – If you suspect any illegal collection practices or have concerns about your rights, talk to a consumer lawyer who specializes in debt issues.
Understand Your State’s Laws – Again, debt collection laws can vary by state, so learn the specifics where you live.
Explore Your Options – Debt assignment may reset the clock for things like bankruptcy filings or debt management plans in some cases. Consider all potential solutions.

The key is to stay on top of the situation, assert your rights as a consumer, and explore all possible ways to resolve the debt in a fair manner. Don’t just roll over for an aggressive debt collector.

Creditor Responsibilities With Assignments

Of course, creditors who assign debts have some responsibilities too when it comes to protecting consumer rights:

Proper Documentation – They need to maintain complete and accurate records about the debt, payments made, and chain of assignment.
Vetting Debt Buyers – Creditors should do their due diligence in vetting any debt buyers they sell to and make sure they’re reputable operators.
Compliance Training – Smart creditors will ensure debt buyers are properly trained on all relevant debt collection laws and regulations.
Recall Rights – Many creditors will include contractual “recall” rights that allow them to pull back assigned debts if the debt buyer acts unethically.

At the end of the day, creditors don’t want their reputations getting dragged through the mud by some rogue debt collector’s bad practices. So it’s in their best interest to assign debts responsibly.

The Secondary Debt Market Explained

You know how I mentioned that creditors can raise capital by selling debts? Well, there’s actually a whole secondary market for trading consumer debts. It’s a multi-billion dollar industry! Here’s a quick overview of how it works: Original creditors will package up batches of unpaid debts and sell them off to different debt buyers. These buyers will then try to collect on those debts or re-sell them to other buyers. The debts get continuously traded and re-traded, often for much less than their face value. A debt buyer might pay just a few cents on the dollar for a delinquent debt portfolio. There are different types of debt buyers too:

Primary Debt Buyers – These are the ones purchasing debts directly from the original creditors.
Secondary Debt Buyers – They purchase debt portfolios from the primary buyers or other secondary buyers.
Debt Collection Agencies – Rather than re-selling, these are the companies actually trying to collect on the debts they purchase.

It’s kind of like a debt trading circle of life! Debts get passed around until they’re either collected on or ultimately deemed uncollectible. Now, you can probably guess that the more times a debt gets re-sold and re-traded, the higher the risk of documentation issues, inflated amounts being claimed, or other collection shenanigans. That’s why it’s so important for consumers to get debts validated and make sure their rights aren’t being violated, especially if their debt has been assigned multiple times.

Debt Bundling and Securitization Trends

Two other big trends to be aware of in the debt assignment world are debt bundling and securitization: Debt Bundling is when creditors package up lots of individual unpaid debts and sell them off as one big bundle or portfolio. This allows debt buyers to purchase debts in bulk rather than one-by-one. The bundling part makes record-keeping more complicated. There’s a higher risk of documentation getting jumbled or lost as the bundled debts get re-sold from buyer to buyer. Securitization takes bundling one step further. In this process, debt buyers will take bundles of debts and actually turn them into debt securities that can be traded on a secondary market. It works kind of like a mortgage-backed security, except instead of home loans, investors are buying securities made up of bundled consumer debts like credit cards, auto loans, etc. The securitization trend has grown in recent years as debt buyers look for new ways to raise capital and cash in on consumer debt portfolios. But critics argue it creates misaligned incentives, prioritizing debt volume over quality underwriting. For consumers, these trends make it even more critical to get documentation validated if your debt has been bundled or securitized. There’s a higher potential for errors and accountability issues the more times a debt has been re-packaged and re-sold.

Creditor Rights vs. Consumer Protections

At the end of the day, debt assignments exist because creditors have a legal right to sell unpaid debts to third parties. It’s just part of the whole credit and lending system. But at the same time, there are federal laws like the Fair Debt Collection Practices Act (FDCPA) that aim to protect consumers from abusive or deceptive debt collection tactics – whether it’s the original creditor or a debt buyer collecting. So it’s a bit of a balancing act between creditor rights to pursue legitimate debts and ensuring debt collectors (including assignees) are following the rules and not trampling on consumer protections. From a consumer perspective, the key things to watch out for with assigned debts are:

Shady Collectors – Make sure you’re dealing with a reputable agency, not a fly-by-night operation.
Improper Documentation – Get debts validated, check your records, and dispute any discrepancies.
Re-Aged Debts – Statute of limitation time limits should carry over, not get reset by assignments.
Inflated Amounts – You shouldn’t be charged extra fees or interest beyond what was originally agreed.
Harassment Tactics – No threats, abusive language, or unfair practices are permitted under the FDCPA.

Basically, you have to stay vigilant as a consumer and not just take a debt collector’s word at face value, even if they claim to have been assigned your debt fair and square.

When to Consult a Lawyer About Assignments

In some situations, it may be wise to consult with a consumer lawyer who specializes in debt issues and creditor harassment cases. A lawyer can review your specific situation and debts to:

Ensure all documentation is proper and no laws were violated in the assignment process
Analyze whether the new debt owner followed all notification and validation requirements
Determine if the new creditor is overstepping their rights in their collection efforts
Advise you of your rights and options for dealing with the assigned debt moving forward
Potentially negotiate a settlement or take legal action if any improprieties occurred

The reality is, the debt-buying industry has had its fair share of bad actors over the years. Some debt collectors play pretty fast and loose with the rules. So if you have any doubts or feel your rights are being violated, it never hurts to at least have a consultation with a qualified debt lawyer. They can review everything with an expert eye. Many consumer law firms in this space work on a contingency basis too. So you may not need any upfront money to have them evaluate your debt assignment situation.

Avoiding Shady Debt Collectors

Unfortunately, the debt-buying world does attract some shadier operators looking to make a quick buck through questionable practices. So it’s wise to watch out for any red flags that might signal you’re dealing with a disreputable debt collector, such as:

Lack of Documentation – If they can’t validate the debt with proper records, be very skeptical.
Harassment Tactics – Threats, profanity, repeated calls at improper hours…that’s all illegal.
Inflated Amounts – They shouldn’t be tacking on extra fees or charging higher interest rates.
Re-Aged Debts – Statute of limitation time limits need to carry over from the original creditor.
Questionable Addresses – Watch out for debt collectors operating out of PO boxes or virtual offices.
Lack of Licensing – Many states require debt collectors to have proper licensing and bonding.
Bad Reviews – Do some online research and see if others have reported issues with the agency.

The bottom line is, you shouldn’t feel intimidated or bullied into paying up if something seems fishy about the debt collector’s practices or documentation. Reputable agencies will operate by the book. If you encounter any red flags, request full debt validation, consult a lawyer if needed, and explore all your options for resolving the debt properly and fairly.

Pros and Cons of Debt Assignments

Like most financial and legal processes, debt assignments come with some potential pros and cons to consider: Pros of Debt Assignments

Allow creditors to raise capital and improve cash flow
Transfer risk of non-payment away from original creditors
Debt buyers may be more motivated to recover delinquent debts
Negotiating settlements with debt buyers is often easier
Assignments are legally permitted under current lending laws

Cons of Debt Assignments

Documentation issues and errors are more likely, especially with re-sold debts
Some debt buyers use unethical, overly aggressive collection tactics
Debts can get “re-aged” or have statutes of limitation reset in some cases
Bundling and securitization trends create more complexity and risks
Lack of incentives for debt buyers to verify underlying debt quality

At the end of the day, debt assignments are a legal and legitimate part of the lending ecosystem. But there are also plenty of historical examples of debt buyers overstepping their bounds and violating consumer protections. So it’s really a matter of ensuring there are proper safeguards, compliance, and accountability measures in place – both from creditors assigning debts responsibly and debt buyers collecting on those debts ethically.

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What is an Assignment of Debt?

By Vanessa Swain Senior Lawyer

Updated on February 22, 2023 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

Perfecting Assignment

Enforcing an Assigned Debt

Recovery of an Assigned Debt

Other Considerations

Key Takeaways

Frequently asked questions.

I t is common for creditors, such as banks and other financiers, to assign their debt to a third party. Usually, an assig nment of debt is done in an effort to minimise the costs of recovery where a debtor has been delinquent for some time. This article looks at:

what it means to ‘assign a debt’;
the legal requirements to perfecting an assignment; and
common problems with enforcing an assigned debt.

Whether you’re a small business owner or the Chief Financial Officer of an ASX-listed company, one fact remains: your customers need to pay you.

This manual aims to help business owners, financial controllers and credit managers best manage and recover their debt.

An assignment of debt, in simple terms, is an agreement that transfers a debt owed to one entity, to another. A creditor does not need the consent of the debtor to assign a debt.

Once a debt is properly assigned, all rights and responsibilities of the original creditor (the assignor ) transfer to the new owner (the assignee ). Once an assignment of debt has been perfected, the assignee can collect the full amount of the debt owed . This includes interest recoverable under the original contract, as if they were the original creditor. A debtor is still responsible for paying the outstanding debt after an assignment. However, now, the debt or must pay the debt to the assignee rather than the original creditor.

Purchasing debt can be a lucrative business. Creditors will generally sell debt at a loss, for example, 20c for each dollar owed. Although, the amount paid will vary depending on factors such as the age of the debt and the likelihood of recovery. This can be a tax write off for the assignor, while the assignee can take steps to recover 100% of the debt owed.

In New South Wales, the requirements for a legally binding assignment of debt are set out in the Conveyancing Act :

the assignment must be in writing. You do this in the form of a deed (deed of assignment) and both the assignor and assignee sign it; and
the assignor must provide notice to the debtor. The requirement for notice must be express and must be in writing. The assignor must notify the debtor advising them of the debt’ s assign ment and to who it has been assigned. The assignee will send a separate notice to the debtor, putting them on notice that the debt is due and payable. They will also provide them with the necessary information to make payment.

The assignor must send the notices to the debtor’s last known address.

Debtor as a Joined Party

In some circumstances, a debtor will be joined as a party to the deed of assignment . There can be a great benefit in this approach . This is because the debtor can provide warranties that the debt is owed and has clear notice of the assignment. However, it is not always practical to do so for a few reasons:

a debtor may not be on speaking terms with the assignor;
a debtor may not be prepared to co-operate or provide appropriate warranties; and
the assignor or the assignee may not want the debtor to be made aware of the sale price . This occurs particularly where the sale price is at a significant discount.

If the debtor is not a party to the deed of assignment, proper notice of the assignment must be provided.

An assignment of debt that has not been properly perfected will not constitute a legal debt owing to the assignee. Rather, the legal right to recover the debt will remain with the assignor. Only an equitable interest in the debt will transfer to the assignee.

Enforcing an Assigned Debt

After validly assigning a debt (in writing and notice has been provided to the debtor’s last known place of residence), the assignee is entitled to take any legal steps available to them to recover the outstanding debt. These recovery options include:

commencing court proceedings;
obtaining a judgment; and
enforcement of that judgment.

Suppose court proceedings have been commenced or judgment already entered in favour of the assignor. In that case, the assignee must take steps to have the proceedings or judgment formally changed into the assignee’s name.

In our experience, recovery of an assigned debt can be problematic because:

debtors often do not understand the concept of debt assignment and may not be aware that their credit contract contains an assignment of debt clause;
disputes can arise as to whether a lawful assignment of debt has arisen. A debtor may claim that the assignor did not provide them with the requisite notice of the assignment, or in some cases, a contract will specifically exclude the creditor from legally assigning a debt;
proper records of the notice of assignment provided to the debtor must be maintained. If proper records have not been kept, it may be difficult to prove that notice has been properly given, which may invalidate the legal assignment; and
the debtor has the right to make an offsetting claim in defence to any recovery action taken by the assignee. A debtor may raise an offsetting claim which has arisen out of a previous arrangement with the assignor (which the assignee may not be aware of). For example, the debtor may have entered into an agreement with the assignor whereby the assignor agreed to accept a lesser amount of the debt owed by way of settlement. Because the assignee acquires the same rights and obligations of the assignor, the terms of that previous settlement agreement will bind the assignee. The court may find that there is no debt owing by the debtor. In this case, the assignee will have been assigned nothing of value.

Other Considerations

When assigning a debt, it is essential that the assignee, in particular, considers relevant statutory limitation periods for commencing proceedings or enforcing a judgment debt . In New South Wales, the time limit:

to file legal proceedings to recover debts is six years from the date of last payment or when the debtor admitted in writing that they owed the debt; and
for enforcing a judgment debt is 12 years from the date of judgment.

An assignment of a debt does not extend these limitation periods.

While there can be benefits to both the assignor and the assignee, an assignment of debt will be unenforceable if done incorrectly. Therefore, if you are considering assigning or being assigned a debt, it is important to seek legal advice. If you need help with drafting or reviewing a deed of assignment or wish to recover a debt that has been assigned to you, contact LegalVision’s debt recovery lawyers on 1300 544 755 or fill out the form on this page.

An assignment of debt is an agreement that transfers a debt owed to one entity, to another. A creditor does not need the consent of the debtor to assign a debt.

Once the assignee has validly assigned a debt, they are entitled to take any legal steps available to them to recover the outstanding debt. This includes commencing court proceedings, obtaining a judgment and enforcement of that judgment.

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What is an Assignment of Debt?

By Sej Lamba

Updated on 26 February 2024 Reading time: 5 minutes

When Could an Assignment of Debt Happen?

Key issues on assignment of debt, drafting the correct documentation, giving notice, key takeaways.

Debts are increasingly common in today’s financial climate, and unfortunately, many people struggle to repay what they owe. Debts owed can be sold to third parties and a lot of companies in the UK purchase debts. However, this can be complicated as specific legal formalities apply when assigning debts. This article will explain some of the critical issues around the assignment of debt.

Debt collection can be a complex process. There are various reasons as to why debt is assigned. For example, a company owed debt may want to avoid putting in time and effort to chase it or want to take legal action to recover it.

To picture a scenario, imagine this:

Joe Bloggs gets a brand-new shiny credit card. Joe purchases lots of nice things for his family with the credit card. Usually, he can keep up with payments as he keeps track of them and earns enough to pay them back;
suddenly, Joe has an injury and cannot work anymore. He has to give up his job and now can’t afford to pay the credit card company back;
Joe ignores various letters chasing the debt and hopes the problem will disappear. Ultimately, after months, the credit card company gives up and sells Joe’s debt to a debt collection agency.

So, in summary – after the debt sale, Joe now owes money to a different company.

In practice, debt assignments can be complex, and the parties must follow the relevant legal rules and draft the correct documentation.

An assignment of debt essentially transfers the debt from one party (the assignor) to a third party (an assignee).

In practice, this will mean the original debtor (e.g. Joe Bloggs) will now owe the debt to a new third-party creditor (e.g. the debt collection business). Therefore, in the scenario above, Joe must now repay the debt to the third-party debt collection business.

This process can be complex. There have been several legal cases in the courts where this process has given rise to disputes.

There are two different types of assignment of debt – a legal assignment of debt and an equitable assignment of debt.

In simple terms:

a legal assignment of debt will transfer the right for enforcement of the debt; and
an equitable assignment of debt will transfer only the benefit of the debt without the right to enforce it.

Let us explore each type below.

Legal Assignment of Debt

If the assignment complies with specific legal requirements under the Law of Property Act 1925, it will be a ‘legal assignment’. This means that the assignee will be the new owner of the debt.

A legal assignment requires various formalities to be effective. For example, it must:

be in writing and signed by the assignor;
the debtor must be given written notice of the assignment;
be absolute with no conditions attached to it;
relate to the whole of the debt and not just part of it; and
not be a charge.

After the transfer of the debt, the assignor can sue the debtor in its own name.

Equitable Assignment of Debt

It is also possible to have an equitable debt transfer – the requirements for this are much less strict. For example, this can be done informally by the assignor informing the assignee that the rights are transferred to them.

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For an equitable assignment, giving notice is not essential, but still always highly advisable.

Where an equitable assignment is made, the assignee won’t have the right to pursue court action for the debt. In this case, the assignee will have to join forces with the assignor to sue for the debt to sue for the debt.

The debtor should receive notice of any debt transfer so they know to whom the money is owed. Following notice, the new debt owner can pursue the debt owed.

A legal assignment is the best option for an assignee of debt – this will give them full rights to enforce the debt.

Assignments of debts can be very complex. For a legal assignment of debt, you need to follow various formalities. Otherwise, it may be unenforceable and lead to disputes. If you need help executing a debt assignment correctly, you should seek legal advice from an experienced lawyer.

If you need help with an assignment of debt, LegalVision’s experienced business lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0808 196 8584 or visit our membership page .

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How Does Debt Assignment Work?

Chloe Meltzer | December 07, 2023

Legal Expert Chloe Meltzer, MA

Chloe Meltzer is an experienced content writer specializing in legal content creation. She holds a degree in English Literature from Arizona State University, complemented by a Master’s in Marketing from California Polytechnic State University-San Luis Obispo.

Edited by Hannah Locklear

Editor at SoloSuit Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: What are your options when your debt has been assigned to a debt collector? Find out why a creditor might have assigned your debt and how to deal with it.

Debt assignment refers to a transfer of debt. This includes all of the associated rights and obligations, as it goes from a creditor to a third party. Debt assignment is essentially the legal transfer of debt to a debt collector (or debt collection agency). After this agency purchases the debt, they will have the responsibility to collect the debt, meaning you will pay your debt to them.

File a response with SoloSuit to win against debt collectors.

Find Out How Debt Assignment Works

When a creditor or lender no longer wants to be responsible for attempting to collect your debt, they will sell your debt to a third party. When this occurs, a Notice of Assignment (NOA) is sent out to you. This should inform you of who is responsible for collecting the rest of your loan or debt.

Legally you must be notified if your debt is assigned to someone new. This is to ensure that you know where to make payments to. If you are not aware of the new assignment, you may send payments to the wrong location which could force you into unintentional default.

Know How the FDCPA Protects You

Third-party debt collectors must act according to the Fair Debt Collection Practices Act (FDCPA). This federal law restricts the methods by which a debt collector can contact you, and attempt to collect debts. The FDCPA regulates the time of day or night a collector can make contact, how often they can call, as well as what they say and how they say it.

If you believe that a debt collector has violated the FDCPA, then you may be able to file a suit against that company. You may also be able to sue for damages or attorney fees.

Stand up to debt collection agencies with SoloSuit.

Learn Why a Creditor Assigns Debt

There are a few reasons why a creditor may assign your debt. Typically, the most common reason is to reduce their risk. By assigning and selling the debt it is no longer their liability. They can ensure they recoup some of their money, and appease investors as well.

Discover How Purchasing a Debt Differs from Debt Assignment

The purchase of debt occurs before assignment. Before the assignment of delinquent debt, a collection agency will be required to purchase it. This is often done at a far lower price, while they still attempt to recoup the entire debt. Because of this, it allows you to attempt to settle your debt for less.

Understand Why Debt Assignment Is Often Criticized

The process of assigning debt is often seen as unethical. With threats, harassment, and lies of all kinds, many debt buyers have been accused of violating the FDCPA. Because of this, debt assignment has seen a good amount of criticism. Some cases have even seen consumers charged with debts that have already been settled or paid .

Nevertheless, this shows how important it is to be on top of your debts. The number one choice you should make with any debt or debt assignment is to respond to all correspondence. This will ensure that you stay in compliance, and act when you need to.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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How to Answer a Summons for debt collection in all 50 states

Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide

Connecticut
Massachusetts
Mississippi
New Hampshire
North Carolina
North Dakota
Pennsylvania
Rhode Island
South Carolina
South Dakota
Vermont ; Vermont (Small Claims court)
West Virginia

Guides on how to resolve debt with every debt collector

Are you being sued by a debt collector? We’re making guides on how to resolve debt with each one.

11 Charter Communications
AAA Collections
Aargon Agency Inc
Absolute Resolutions Investments LLC
ACEI Collections
Account Services
Accredited Collection Services
Advanced Recovery Systems
AFNI Collections
Alco Capital Group LLC
Aldous and Associates
Alliance Collections
Alliance One
Alliant Capital Management
Alpha Recovery Corp
Alltran Financial
Alltran Health
Alorica Inc.
Amcol Clmbia in Court
American Coradius International
American Profit Recovery
American Recovery Service
Americollect
AmSher Collection Services
Apelles LLC
AR Resources
ARC Collections
ARM Solutions
Arrow Financial Services
ARS National Services
ARSC Debt Collectors
AscensionPoint Recovery Services
Asset Acceptance LLC
Asset Recovery Solutions
Associated Credit Services
Atlantic Credit and Finance
Atradius Collections
Automated Collection Services, Inc.
Autovest LLC
AWA Collections
Balekian Hayes
Bay Area Receivables
BCA Financial Services
BC Services
Benuck and Rainey
Berlin-Wheeler
Bluebonnet Financial LLC
Bonneville Collections
Bull City Financial
Bureaus Investment Group
Caine and Weiner
Capio Partners
Capital Accounts
Capital Collections
Capital Management Services
Carmel Financial/New Coast Direct
Cavalry SPV I LLC
CBCS Collections
CBV Collections
CCB Credit Services
CCS Collections
CCS Offices
Central Mediation Services
Central Portfolio Control
Cerastes LLC
Choice Recovery
Choice Recovery Inc
CKS Financial
CKMS Financial
Client Services
CMRE Financial Services
Coast Professional
Comenity Bank Debt Collection
Commonwealth Financial
ConServe Debt Collection
Consumer Collection Management
Contract Callers Inc
Convergent Healthcare Recoveries
Convergent Outsourcing
Couch Conville & Blitt
Covington Credit
Credco in Court
Credence Resource Management
Credit Bureau Systems
Credit Control Corporation
Credit Management Company
Credit Management LP
Credit Systems
CTC Debt Collector
CVCS Debt Collection
Cypress Financial Recoveries
D&A Services
Daniels, Norelli, Cecere & Tavel P.C.
DCM Services
Debt Recovery Solutions
Delanor Kemper & Associates
Department Stores National Bank
Direct Recovery Associates
Discover Collections
Diversified Adjustment
Diversified Consultants
Diversified Recovery Bureau
DNF Associates, LLC
Dynamic Collectors
Eagle Accounts Group, Inc.
Eastern Account System
Ellington and Associates Collections
Encore Capital Group
Enerson Law
Enerson Law LLC
Enhanced Recovery Company
ERC Collections
ERSolutions
Estate Information Services
Equable Ascent Financial
Everest Business Funding
Executive Credit Management
Faber and Brand
Factual Data
Falls Collection Service
FCO Collections and Outsourcing
FIA Card Services
fin rec svc (Financial Recovery Services)
First Federal Credit Credit Control
First Financial Bank
First Portfolio Ventures LLC
First Progress
FirstPoint Collection Resources
Firstsource Advantage
FMA Alliance
Forster & Garbus
Franklin Collection Services
Freedom Plus
Freshview Solutions
Frontline Asset
Frost Arnett
Fulton Friedman & Gullace LLP
Galaxy International Purchasing, LLC
GC Debt Collection
GC Services
General Revenue Corporation
GLA Collections
Glass Mountain Capital
Glasser and Glasser
Global Credit Collection Corp
Global Trust Management
GMAC Financing
Golden 1 Credit Union
Grant and Weber
Grant Mercantile Agency
Gulf Coast Collection Bureau
Halsted Financial Services
Harris and Harris
Harvard Collection
Harvest Credit Management
Helvey and Associates
Hollis Cobb
Holloway Moxley
Hosto Buchan
Howard Lee Schiff
H&R Accounts
Hudson & Keyse LLC?
Hunter Warfield
Impact Receivables Management
Innovative Recovery
Integras Capital Recovery LLC
Javitch Block
JHPDE Finance 1 LLC
JP Receivables Management Partners
Kenneth Eisen and Associates
KeyBank student loans
Kirschenbaum, Phillips & Levy P.C.
KLS Financial Services
Kramer & Frank
Lakeside Collection
Lending Club
Lincoln and Morgan Kabbage
Linebarger Goggan Blair & Sampson LLP
Lockhart Collection Agency
LJ Ross Associates
LTD Collections
Malcolm S. Gerald and Associates
Malen & Associates
Mandarich Law Group
Mannbracken
Marcam Associates
MARS Inc. Collections
MCA Management Company
McCarthy, Burgess & Wolff
Meade & Associates
Mercantile Adjustment Bureau
Merchants Credit Association
MGM Collections
Michael J Adams PC
Midland Funding LLC
Mid-South Adjustment
Monarch Recovery
Monterey Financial
Moss Law Firm
Mountain Land Collections
MRS Associates
MSW Capital LLC
Mullooly, Jeffrey, Rooney & Flynn
Nathan and Nathan PC
National Collegiate Trust
National Credit Adjusters
National Credit Care
National Credit Systems
National Enterprise Systems
National Recovery Agency
National Recovery Solutions
Nationwide Credit
Nationwide Recovery Services
Nationwide Recovery Systems
NCO Financial Systems Incorporated
North American Recovery
Northland Group
Northstar Capital Acquisition
Northstar Location Services
NRC Collection Agency
Oliver Adjustment Company
Oliphant Financial, LLC
P&B Capital Group
PCB Collections Agency
Palisades Collection LLC
Pallida LLC
Paragon Contracting Services
Paragon Revenue Group
Payday Loan Debt Collectors
Pendrick Capital Partners
Penn Credit
Perdue Brandon
Persolve LLC
Phillips & Cohen Associates
Phoenix Financial Services
Pioneer Credit Recovery
PRA Group, Inc.
Pressler, Felt & Warshaw LLP
Prestige Services, Inc.
Prince Parker and Associates
Professional Finance Company
Progressive Management Systems
Provest Law
Quaternary Collection Agency
RAB Collection Agency
Rash Curtis and Associates
Radius Global SOL
Radius Global Solutions
Rawlings Company
Razor Capital
Real Time Resolutions
Receivables Performance Management
Regents and Associates
Reliant Capital Solutions
Resurgent Capital Services and LVNV Funding
Revco Solutions
Revenue Enterprises LLC
Revenue Group
RGS Financial, Inc.
RMP LLC in Court
RMP Services
RS Clark and Associates
RTR Financial Services
Rubin & Rothman
Salander Enterprises LLC
Samara Portfolio Management
SCA Collections
Scott Parnell and Associates
Second Round Collections
Second Round Sub LLC
Selip & Stylianou LLP
Sequium Asset Solutions
Sessoms and Rogers
Sherman Acquisition
Sherman Financial Group
SIMM Associates
Source Receivables Management
Southern Management Systems
Southwest Credit Group
Spire Recovery Solutions
SRS Company
Stark Collection Agency
State Collection Service
Stenger and Stenger
Stillman Law Office
Summit Account Resolution
Sunrise Credit Services
Superlative RM Debt Collector
Suttell and Hammer
Synergetic Communication
Synerprise Consulting
The Law Office of Michael J Scott
Trellis Company
Troy Capital
TRS Recovery Services
Tulsa Teachers Credit Union
UCB Collection
Unifin Debt Collector
Universal Credit Services
US Bank Collections
USAA collections
USCB America
Valentine and Kebartas
Valley Servicing
Vance & Huffman LLC
Van Ru Credit Corporation
Velo Law Office
Velocity Investments
Viking Client Services
Wakefield and Associates
Waypoint Resource Group
Weinberg and Associates
Weltman, Weinberg & Reis
Westwood Funding
Williams and Fudge
Wilshire Consumer Credit
Wolpoff & Abramson
Worldwide Asset Purchasing
www.AutomotiveCredit.com
Zarzaur & Schwartz
Zwicker & Associates

Resolve your debt with your creditor

Some creditors, banks, and lenders have an internal collections department. If they come after you for a debt, Solosuit can still help you respond and resolve the debt. Here’s a list of guides on how to resolve debt with different creditors.

American Express ; American Express – Debt Collection
Bank of America
Best Buy Credit Card
Capital One
Credit One Bank
Old Navy Credit Card
PayPal Synchrony Card
Regional Finance
Retailers National Bank
Reunion Student Loan Finance Corporation
SYNCB/PPEXTR
Synchrony Bank
Synchrony Walmart Card
Target National Bank
Wells Fargo
Can I Pay My Original Creditor Instead of a Debt Collection Agency?
Can I Settle a Debt with the Original Creditor?

Settle your medical debt

Having a health challenge is stressful, but dealing medical debt on top of it is overwhelming. Here are some resources on how to manage medical debt.

Am I Responsible for My Spouse's Medical Debt?
Do I Need a Lawyer for Medical Bills?
Do I Need a Lawyer to Fight Medical Bill Debt?
Does Bankruptcy Clear Medical Debt?
How Much Do Collection Agencies Pay for Medical Debt?
How to Find Medical Debt Forgiveness Programs
Is There a Statute of Limitations on Medical Bills?
Medical Debt Statute of Limitations by State
Summoned to Court for Medical Bills — What Do I Do?
Summoned to Court for Medical Bills? What to Do Next

Guides on arbitration

If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.

How Arbitration Works
How to Find an Arbitration Clause in Your Credit Agreement
How to Make a Motion to Compel Arbitration
How to Make a Motion to Compel Arbitration in Florida
How to Make a Motion to Compel Arbitration Without an Attorney
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Sample Motion to Compel Arbitration

Stop calls from debt collectors

Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.

1-800-390-7584
800-289-8004
800-955-6600
877-366-0169
877-591-0747
800-278-2420
800-604-0064
800-846-6406
877-317-0948
888-899-4332
888-912-7925
202-367-9070
502-267-7522

Federal debt collection laws can protect you

Knowing your rights makes it easier to stand up for your rights. Below, we’ve compiled all our articles on federal debt collection laws that protect you from unfair practices.

15 USC 1692 Explained
Does the Fair Credit Reporting Act Work in Florida?
FDCPA Violations List
How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)
How to Make a Fair Debt Collection Practices Act Demand Letter
How to Submit a Transunion Dispute
How to Submit an Equifax Dispute
How to Submit an Experian Dispute
What Debt Collectors Cannot Do — FDCPA Explained
What Does Account Information Disputed by Consumer Meets FCRA Requirements Mean?
What does “meets FCRA requirements” mean?
What does FCRA stand for?
What is the Consumer Credit Protection Act

Get debt relief in your state

We’ve created a specialized guide on how to find debt relief in all 50 states, complete with steps to take to find relief, state-specific resources, and more.

Debt collection laws in all 50 states

Debt collection laws vary by state, so we have compiled a guide to each state’s debt collection laws to make it easier for you to stand up for your rights—no matter where you live.

Debt Collection Laws in Alabama
Debt Collection Laws in Alaska
Debt Collection Laws in Arizona
Debt Collection Laws in Arkansas
Debt Collection Laws in California
Debt Collection Laws in Colorado
Debt Collection Laws in Connecticut
Debt Collection Laws in Delaware
Debt Collection Laws in Florida
Debt Collection Laws in Georgia
Debt Collection Laws in Hawaii
Debt Collection Laws in Kansas
Debt Collection Laws in Idaho
Debt Collection Laws in Illinois
Debt Collection Laws in Indiana
Debt Collection Laws in Iowa
Debt Collection Laws in Kentucky
Debt Collection Laws in Louisiana
Debt Collection Laws in Massachusetts
Debt Collection Laws in Michigan
Debt Collection Laws in Minnesota
Debt Collection Laws in Mississippi
Debt Collection Laws in Missouri
Debt Collection Laws in Montana
Debt Collection Laws in Nebraska
Debt Collection Laws in Nevada
Debt Collection Laws in New Hampshire
Debt Collection Laws in New Jersey
Debt Collection Laws in New Mexico
Debt Collection Laws in New York
Debt Collection Laws in North Carolina
Debt Collection Laws in North Dakota
Debt Collection Laws in Ohio
Debt Collection Laws in Oklahoma
Debt Collection Laws in Oregon
Debt Collection Laws in Pennsylvania
Debt Collection Laws in Rhode Island
Debt Collection Laws in South Carolina
Debt Collection Laws in South Dakota
Debt Collection Laws in Tennessee
Debt Collection Laws in Texas
Debt Collection Laws in Vermont
Debt Collection Laws in Virginia
Debt Collection Laws in Washington
Debt Collection Laws in West Virginia
Debt Collection Laws in Wisconsin
Debt Collection Laws in Wyoming

Statute of limitations on debt state guides

Like all debt collection laws, the statute of limitations on debt varies by state. So, we wrote a guide on each state’s statutes. Check it out below.

Statute of Limitations on Debt Collection by State (Best Guide)

Statute of Limitations on Debt Collection in Alabama
Statute of Limitations on Debt Collection in Alaska
Statute of Limitations on Debt Collection in Arizona
Statute of Limitations on Debt Collection in Arkansas
Statute of Limitations on Debt Collection in California
Statute of Limitations on Debt Collection in Connecticut
Statute of Limitations on Debt Collection in Colorado
Statute of Limitations on Debt Collection in Delaware
Statute of Limitations on Debt Collection in Florida
Statute of Limitations on Debt Collection in Georgia
Statute of Limitations on Debt Collection in Hawaii
Statute of Limitations on Debt Collection in Illinois
Statute of Limitations on Debt Collection in Indiana
Statute of Limitations on Debt Collection in Iowa
Statute of Limitations on Debt Collection in Kansas
Statute of Limitations on Debt Collection in Louisiana
Statute of Limitations on Debt Collection in Maine
Statute of Limitations on Debt Collection in Maryland
Statute of Limitations on Debt Collection in Michigan
Statute of Limitations on Debt Collection in Minnesota
Statute of Limitations on Debt Collection in Mississippi
Statute of Limitations on Debt Collection in Missouri
Statute of Limitations on Debt Collection in Montana
Statute of Limitations on Debt Collection in Nebraska
Statute of Limitations on Debt Collection in Nevada
Statute of Limitations on Debt Collection in New Hampshire
Statute of Limitations on Debt Collection in New Jersey
Statute of Limitations on Debt Collection in New Mexico
Statute of Limitations on Debt Collection in New York
Statute of Limitations on Debt Collection in North Carolina
Statute of Limitations on Debt Collection in North Dakota
Statute of Limitations on Debt Collection in Oklahoma
Statute of Limitations on Debt Collection in Oregon
Statute of Limitations on Debt Collection in Oregon (Complete Guide)
Statute of Limitations on Debt Collection in Pennsylvania
Statute of Limitations on Debt Collection in Rhode Island
Statute of Limitations on Debt Collection in South Carolina
Statute of Limitations on Debt Collection in South Dakota
Statute of Limitations on Debt Collection in Tennessee
Statute of Limitations on Debt Collection in Texas
Statute of Limitations on Debt Collection in Utah
Statute of Limitations on Debt Collection in Vermont
Statute of Limitations on Debt Collection in Virginia
Statute of Limitations on Debt Collection in Washington
Statute of Limitations on Debt Collection in West Virginia
Statute of Limitations on Debt Collection in Wisconsin
Statute of Limitations on Debt Collection in Wyoming

Check the status of your court case

Don’t have time to go to your local courthouse to check the status of your case? We’ve created a guide on how to check the status of your case in every state, complete with online search tools and court directories.

Alabama Court Case Search—Find Your Lawsuit
Alaska Court Case Search — Find Your Lawsuit
Arizona Court Case Search - Find Your Lawsuit
Arkansas Court Case Search — Find Your Lawsuit
California Court Case Search- Find Your Lawsuit
Colorado Court Case Search — Find Your Lawsuit
Connecticut Case Lookup — Find Your Court Case
Delaware Court Case Search — Find Your Lawsuit
Florida Court Case Search — Find Your Lawsuit
Georgia Court Case Search — Find Your Lawsuit
Hawaii Court Case Search — Find Your Lawsuit
Idaho Court Case Search – Find Your Lawsuit
Illinois Court Case Search — Find Your Lawsuit
Indiana Court Case Search — Find Your Lawsuit
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Kentucky Court Case Search — Find Your Lawsuit
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Maryland Court Case Search — Find Your Lawsuit
Massachusetts Court Case Search — Find Your Lawsuit
Michigan Court Case Search — Find Your Lawsuit
Minnesota Court Case Search — Find Your Lawsuit
Mississippi Court Case Search — Find Your Lawsuit
Missouri Court Case Search — Find Your Lawsuit
Montana Court Case Search — Find Your Lawsuit
Nebraska Court Case Search — Find Your Lawsuit
Nevada Court Case Search — Find Your Lawsuit
New Hampshire Court Case Search — Find Your Lawsuit
New Jersey Court Case Search—Find Your Lawsuit
New Mexico Court Case Search - Find Your Lawsuit
New York Case Search — Find Your Lawsuit
North Carolina Court Case Search — Find Your Lawsuit
North Dakota Court Case Search �� Find Your Lawsuit
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Oklahoma Court Case Search — Find Your Lawsuit
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Pennsylvania Court Case Search — Find Your Lawsuit
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South Carolina Court Case Search — Find Your Lawsuit
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Utah Court Case Search — Find Your Lawsuit
Vermont Court Case Search — Find Your Lawsuit
Virginia Court Case Search — Find Your Lawsuit
Washington Court Case Search — Find Your Lawsuit
West Virginia Court Case Search — Find Your Lawsuit
Wisconsin Court Case Search — Find Your Lawsuit
Wyoming Court Case Search — Find Your Lawsuit

How to stop wage garnishment in your state

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in all 50 states.

Stop Wage Garnishment in Alabama
Stop Wage Garnishment in Alaska
Stop Wage Garnishment in Arizona
Stop Wage Garnishment in Arkansas
Stop Wage Garnishment in California
Stop Wage Garnishment in Colorado
Stop Wage Garnishment in Connecticut
Stop Wage Garnishment in Delaware
Stop Wage Garnishment in Florida
Stop Wage Garnishment in Georgia
Stop Wage Garnishment in Hawaii
Stop Wage Garnishment in Idaho
Stop Wage Garnishment in Illinois
Stop Wage Garnishment in Indiana
Stop Wage Garnishment in Iowa
Stop Wage Garnishment in Kansas
Stop Wage Garnishment in Kentucky
Stop Wage Garnishment in Louisiana
Stop Wage Garnishment in Maine
Stop Wage Garnishment in Maryland
Stop Wage Garnishment in Massachusetts
Stop Wage Garnishment in Michigan
Stop Wage Garnishment in Minnesota
Stop Wage Garnishment in Mississippi
Stop Wage Garnishment in Missouri
Stop Wage Garnishment in Montana
Stop Wage Garnishment in Nevada
Stop Wage Garnishment in New Hampshire
Stop Wage Garnishment in New Jersey
Stop Wage Garnishment in New Mexico
Stop Wage Garnishment in New York
Stop Wage Garnishment in North Carolina
Stop Wage Garnishment in North Dakota
Stop Wage Garnishment in Ohio
Stop Wage Garnishment in Oklahoma
Stop Wage Garnishment in Oregon
Stop Wage Garnishment in Pennsylvania
Stop Wage Garnishment in Rhode Island
Stop Wage Garnishment in South Carolina
Stop Wage Garnishment in South Dakota
Stop Wage Garnishment in Tennessee
Stop Wage Garnishment In Texas
Stop Wage Garnishment In Utah
Stop Wage Garnishment in Vermont
Stop Wage Garnishment in Virginia
Stop Wage Garnishment in Washington
Stop Wage Garnishment in West Virginia
Stop Wage Garnishment in Wisconsin
Stop Wage Garnishment in Wyoming

Other wage garnishment resources

Bank Account Garnishment and Liens in Texas
Can I Stop Wage Garnishment?
Can My Wife's Bank Account Be Garnished for My Debt?
Can Payday Loans Garnish Your Wages?
Can pensions be garnished?
Can Private Disability Payments Be Garnished?
Can Social Security Disability Be Garnished?
Can They Garnish Your Wages for Credit Card Debt?
Can You Stop a Garnishment Once It Starts?
Guide to Garnishment Limits by State
How Can I Stop Wage Garnishments Immediately?
How Long Before a Creditor Can Garnish Wages?
How Long Does It Take to Get Garnished Wages Back?
How to Fight a Wage Garnishment
How to Prevent Wage Garnishment
How to Stop a Garnishment
How to Stop Social Security Wage Garnishment
How to Stop Wage Garnishment — Everything You Need to Know
New York Garnishment Laws – Overview
Ohio Garnishment Laws — What They Say
Wage Garnishment Lawyer
What Is Wage Garnishment?

How to settle a debt in your state

Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created a guide on how to settle your debt in all 50 states. Find out how to settle in your state with a simple click and explore other debt settlement resources below.

How to Settle a Debt in Alabama
How to Settle a Debt in Alaska
How to Settle a Debt in Arizona
How to Settle a Debt in Arkansas
How to Settle a Debt in California
How to Settle a Debt in Colorado
How to Settle a Debt in Delaware
How to Settle a Debt in Florida
How to Settle a Debt in Hawaii
How to Settle a Debt in Idaho
How to Settle a Debt in Illinois
How to Settle a Debt in Indiana
How to Settle a Debt in Iowa
How to Settle a Debt in Kansas
How to Settle a Debt in Kentucky
How to Settle a Debt in Louisiana
How to Settle a Debt in Maryland
How to Settle a Debt in Massachusetts
How to Settle a Debt in Michigan
How to Settle a Debt in Minnesota
How to Settle a Debt in Mississippi
How to Settle a Debt in Missouri
How to Settle a Debt in Montana
How to Settle a Debt in Nebraska
How to Settle a Debt in Nevada
How to Settle a Debt in New Hampshire
How to Settle a Debt in New Jersey
How to Settle a Debt in New Mexico
How to Settle a Debt in New York
How to Settle a Debt in North Carolina
How to Settle a Debt in North Dakota
How to Settle a Debt in Ohio
How to Settle a Debt in Oklahoma
How to Settle a Debt in Oregon
How to Settle a Debt in Pennsylvania
How to Settle a Debt in South Carolina
How to Settle a Debt in South Dakota
How to Settle a Debt in Tennessee
How to Settle a Debt in Texas
How to Settle a Debt in Utah
How to Settle a Debt in Vermont
How to Settle a Debt in Virginia
How to Settle a Debt in West Virginia
How to Settle a Debt in Wisconsin
How to Settle a Debt in Wyoming

How to settle with every debt collector

Not sure how to negotiate a debt settlement with a debt collector? We are creating guides to help you know how to start the settlement conversation and increase your chances of coming to an agreement with every debt collector.

American Express
Capitol One
Cavalry SPV
Midland Funding
Moore Law Group
Navy Federal
NCB Management Services
Portfolio Recovery

Other debt settlement resources

Best Debt Settlement Companies
Can I Settle a Debt After Being Served?
Can I Still Settle a Debt After Being Served?
Can You Settle a Warrant in Debt Before Court?
Debt Management vs. Debt Settlement
Debt Settlement Pros and Cons
Debt Settlement Scam
Do I Need to Hire a Debt Settlement Lawyer?
Do You Need a Debt Settlement Attorney in Houston Texas?
Do You Owe Taxes on Settled Debt?
Here’s a Sample Letter to Collection Agencies to Settle Debt
How Can I Settle My Credit Card Debt Before Going to Court?
How Do I Know if a Debt Settlement Company Is Legitimate?
How Long Does a Lawsuit Take to Settle?
How Much Do Settlement Companies Charge?
How I Settled My Credit Card Debt With Discover
How to Make a Debt Settlement Agreement
How to Make a Settlement Offer to Navient
How to Negotiate a Debt Settlement with a Law Firm
How to send Santander a settlement letter
How to Settle Debt for Pennies on the Dollar
How to Settle Debt in 3 Steps
How to Settle Debt with a Reduced Lump Sum Payment
How to Settle a Credit Card Debt Lawsuit — Ultimate Guide
How to Settle Credit Card Debt When a Lawsuit Has Been Filed
If You Are Using a Debt Relief Agency, Can You Settle Yourself with the Creditor?
Largest Debt Settlement Companies
Should I Settle a Collection or Pay in Full?
Summary of the Equifax Data Breach Settlement
The Advantages of Pre-Settlement Lawsuit Funding
The FTC Regulates Debt Settlement Through the Telemarketing Sales Rule
The Pros and Cons of Debt Settlement
What Happens if I Reject a Settlement Offer?
What Happens if You Don't Pay a Debt Settlement?
What Happens When You Settle a Debt?
What Is A Debt Settlement Agreement?
What is Debt Settlement?
What Percentage Should I Offer to Settle Debt?
What to Ask for in a Settlement Agreement
Who Qualifies for Debt Settlement?
Will Collection Agencies Settle for Less?
5 Signs of a Debt Settlement Scam

Personal loan and debt relief reviews

We give a factual review of the following debt consolidation, debt settlement, and loan organizations and companies to help you make an informed decision before you take on a debt.

Accredited Debt Relief Debt Settlement Reviews
Advance America Loan Review
ACE Cash Express Personal Loan Review
BMG Money Loan Review
BMO Harris Bank Review: Pros and Cons
Brite Solutions Debt Settlement Reviews
Caliber Home Loans Mortgage Review
Cambridge Debt Consolidation Review
Campus Debt Solutions Review
CashNetUSA Review
Century Debt Settlement Reviews
ClearPoint Debt Management Review
Click N Loan Reviews
CuraDebt Debt Settlement Review
CuraDebt Reviews: Debt Relief Assistance For California Residents
Debt Eraser Review
Debtconsolidation.com Debt Settlement Reviews
Eagle One Debt Settlement Reviews
Freedom Debt Relief Debt Settlement Reviews
Global Holdings Debt Settlement Reviews
Golden 1 Credit Union Personal Loan Review
Honda Financial Services Review
iLending Reviews
Infinite Law Group Debt Settlement Reviews
JG Wentworth Debt Settlement Reviews
LoanMart Reviews
Mastriani Law Firm Review
Milestone ® Mastercard ® Review
ModoLoan Review
Money Management International Reviews
M&T Mortgage Company Review
National Debt Relief Debt Settlement Reviews
New Era Debt Settlement Reviews
OppLoans Review
Pacific Debt Relief Reviews
Palisade Legal Group Debt Settlement Reviews
PCG Debt Consolidation Review
PenFed Auto Loan Review
Priority Plus Financial Reviews
Roseland Associates Debt Consolidation Review
SDCCU Debt Consolidation Review
Speedy Cash Loans Review
Symple Lending Reviews
Tripoint Lending Reviews
TurboDebt Debt Settlement Reviews
Turnbull Law Group Debt Settlement Reviews
United Debt Settlement Reviews
Upgrade Auto Loans Reviews

How to repair and improve your credit score

Debt has a big impact on your credit. Below is a list of guides on how to repair and improve your credit, even while managing major debt.

3 Ways to Repair Your Credit with Debt Collections
5 Pros and Cons of Credit Cards & How to Use Them Wisely
6 Reasons Your Credit Score Isn't Going Up
Bankruptcy vs Debt Settlement: Which is Better for Your Credit Score?
Does Debt Consolidation Hurt Your Credit Score?
Does Wage Garnishment Affect Credit?
Guide to Disclosing Income on Your Credit Card Application
How Long Does It Take to Improve My Credit Score After Debt Settlement?
How Often Does Merrick Bank Increase Your Credit Limit?
How to fix your credit to buy a house
How to Handle Debt and Improve Credit
How to Raise My Credit Score 40 Points Fast
If I Settle with a Collection Agency, Will It Hurt My Credit?
Is 600 a Good Credit Score?
Obama Credit Card Debt Relief Program – How to Use It
Sample credit report dispute letter
Should I Use Credit Journey?
Understanding myFICO: Your Gateway to Better Credit
What Does "DLA" Mean on a Credit Report?
What Is A Good Credit Score For Businesses?
What is American Credit Acceptance?
What is CBNA on my credit report?
What is CreditFresh?
Who Made the Credit Score?
Why is THD/CBNA on my credit report?

How to resolve student loan debt

Struggling with student debt? SoloSuit’s got you covered. Below are resources on handling student loan debt.

Budgeting Strategies for Students: How to Manage Your Finances Wisely
Can You Go to Jail for Not Paying Student Loans?
Can You Settle Student Loan Debt?
Do Student Loans Go Away After 7 Years? (2022 Guide)
Do You Need a Student Loan Lawyer? (Complete Guide)
Does Student Debt Die With You?
How to Manage a Student Debt
How to Get Rid of Student Loan Debt
Mandatory Forbearance Request Student Loan Debt Burden
Negative Economic Effects of Student Loan Debt on the US Economy
Pros and Cons of Taking a Student Loan
Regional Adjustment Bureau Student Loans – How to Win
The Real Impact of Student Debt: How Our Brains Handle It
Why It's Important to Teach Students How to Manage Debt
5 Alternatives to Taking a Student Loan
5 Tips for Students: How to Create a Realistic and Effective Budget
7 College Financial Planning Tips for Students
7 Things to Consider When Taking a Student Loan
7 Tips to Manage Your Student Loans

Civil law legal definitions

You can represent yourself in court. Save yourself the time and cost of finding an attorney, and use the following resources to understand legal definitions better and how they may apply to your case.

Accleration Clause — Definition
Adjuster - Defined
Adverse Action — Definition
Affidavit — A Definition
Annulment vs. divorce – what's the difference?
Anticipatory Repudiation — Definition
Bench Trial — Defined
Certificate of Debt: A Definition
Commuted Sentence – Definition
Constructive Eviction - Defined
Constructive Discharge - Definition
Defendant - Definition and Everything You Need to Know
Demurred – Definition
Dischargeable - Definition
Disclosures — Definition
False Imprisonment Defined
Good Faith Exception – Definition
Hearsay — A Definition
HOEPA – Definition
Implied Contract – Definition
Injunctive Relief — A Definition
Intestate–Defined
Irrevocable Agreement — Defined
Joint Custody–Defined
Litigator — A Definition
Mediation - Definition
Medical Malpractice — Definition
Mistrial — A Definition
Mitigating Circumstances — Definition
Motion for Summary Judgment — Definition
Nolle Prosequi – Definition
Nunc Pro Tunc — A Definition
Plaintiff - Definition and Everything You Need to Know
Pro Se - Defined
Probable Cause Hearing — Definition
Restitution – Definition
Sole Custody-Defined
Statute of Limitations—Definition and Everything You Need to Know
Summons—Definition
Tenancy in Common – Defined
Time Is of the Essence – Definition
What Is the Bankruptcy Definition of Consumer Debt?
Wrongful Termination–Defined

Get answers to these FAQs on debt collection

Am I Responsible for My Husband's Debts If We Divorce?
Am I Responsible for My Parent's Debt if I Have Power of Attorney?
Can a Collection Agency Add Fees on the Debt?
Can a Collection Agency Charge Interest on a Debt?
Can a Credit Card Company Sue Me?
Can a Debt Collector Freeze Your Bank Account?
Can a Debt Collector Leave a Voicemail?
Can a Debt Collector Take My Car in California?
Can a Judgment Creditor Take my Car?
Can a Process Server Leave a Summons Taped to My Door?
Can an Eviction Be Reversed?
Can Credit Card Companies Garnish Your Wages?
Can Credit Cards Garnish Wages?
Can Debt Collectors Call From Local Numbers?
Can Debt Collectors Call You at Work in Texas?
Can Debt Collectors Call Your Family?
Can Debt Collectors Leave Voicemails?
Can I Pay a Debt Before the Court Date?
Can I Rent an Apartment if I Have Debt in Collection?
Can I Sue the President for Emotional Distress?
Can the SCRA Stop a Default Judgment?
Can the Statute of Limitations be Extended?
Can You Appeal a Default Judgement?
Can You Get Unemployment if You Quit?
Can You Go to Jail for a Payday Loan?
Can You Go to Jail for Credit Card Debt?
Can You Negotiate with Westlake Financial?
Can You Record a Call with a Debt Collector in Your State?
Can You Serve Someone with a Collections Lawsuit at Their Work?
Can You Sue Someone Who Has Filed Chapter 7 Bankruptcy?
Capital One is Suing Me – How Can I Win?
Debt Snowball vs. Debt Avalanche: Which One Is Apt for You?
Do 609 Letters Really Work?
Do Debt Collectors Ever Give Up?
Do I Have Too Much Debt to Divorce My Spouse?
Do I Need a Debt Collection Defense Attorney?
Do I Need a Debt Negotiator?
Do I Need a Legal Coach?
Do I Need a Payday Loans Lawyer?
Does a Living Trust Protect Your Assets from Lawsuits?
Does Chase Sue for Credit Card Debt?
Does Debt Consolidation Have Risks?
Does Midland Funding Show Up to Court?
How Can I Get Financial Assistance in PA?
How do Debt Relief Scams Work?
How Do I Find Out If I Have Any Judgments Against Me?
How Do I Get Rid of a Judgment Lien on My Property?
How Do I Register on the Do Not Call List?
How Does a Flex Loan Work?
How Does Debt Affect Your Ability to Buy a Home?
How Does Finwise Bank Work?
How does Navy Credit debt forgiveness work?
How Does Payments.tsico Work?
How Important is it to Protect your Assets from Unexpected Events?
How is Debt Divided in Divorce?
How Long Do Creditors Have to Collect a Debt from an Estate?
How long do debt collectors take to respond to debt validation letters?
How Long Does a Judgement Last?
How Long Does a Judgment Last?
How Long Does a Levy Stay on a Bank Account?
How Long Does an Eviction Stay on Your Record?
How Many Calls from a Debt Collector is Considered Harassment?
How Many Times Can a Judgment Be Renewed in North Carolina?
How Many Times Can a Judgment be Renewed in Oklahoma?
How Much Do Collection Agencies Pay for Debt?
How Much Do You Have to Be in Debt to File Chapter 7?
How Much Does College Actually Cost?
How Often Do Credit Card Companies Sue for Non-Payment?
How Should You Respond to the Theft of Your Identity?
I am being sued because my identity was stolen - What do I do?
If a Car is Repossessed Do I Still Owe the Debt?
Is Debt Forgiveness Taxable?
Is Freedom Debt Relief a Scam?
Is it Legal for Debt Collectors to Call Family Members?
Is it Smart to Consolidate Debt?
Is LVNV Funding a Legitimate Company? - Them in Court
Is My Case in the Right Venue?
Is Portfolio Recovery Associates Legit? — How to Win
Is Severance Pay Taxable?
Is SoloSuit Worth It?
Is Someone with Power of Attorney Responsible for Debt After Death?
Is the NTB Credit Card Safe?
Is There a Judgment Against Me Without my Knowledge?
Is transworld systems legitimate? — How to win in court
Liquidate–What Does it Mean?
Litigation Finance: Is it a Good Investment?
Received a 3-Day Eviction Notice? Here's What To Do
Should I File Bankruptcy Before or After a Judgment?
Should I Hire a Civil Litigation Attorney?
Should I Hire a Civil Rights Lawyer?
Should I Hire a Litigation Attorney?
Should I Marry Someone With Debt?
Should I Pay Off an Old Apartment Debt?
Should I Send a Demand Letter Before a Lawsuit?
Should I Use My IRA to Pay Off Credit Card Debt?
Should You Communicate with a Debt Collector in Writing or by Telephone?
Should You Invest in Stocks While In Debt?
Subsidized vs. Unsubsidized Loans: Which is Better?
The Truth: Should You Never Pay a Debt Collection Agency?
What are the biggest debt collector companies in the US?
What are the different types of debt?
What Bank Is Behind Best Buy's Credit Card?
What Bank Issues Kohl's Credit Card?
What Bank Owns Old Navy Credit Card?
What Credit Bureau does Aqua Finance Use?
What Credit Bureau Does Truliant Use?
What Does “Apple Pay Transaction Under Review” Mean?
What Does a Debt Collector Have to Prove in Court?
What Does BAC Stand For?
What does HAFA stand for?
What Does Payment Deferred Mean?
What Does Reaffirmation of Debt Mean?
What Happens After a Motion for Default Is Filed?
What Happens at a Motion for Summary Judgment Hearing?
What Happens If a Defendant Does Not Pay a Judgment?
What Happens If a Process Server Can't Serve You?
What Happens if a Tenant Wins an Eviction Lawsuit?
What Happens If Someone Sues You and You Have No Money?
What Happens If You Avoid Getting Served Court Papers?
What Happens If You Don’t Pay Speedy Cash?
What Happens If You Ignore a Debt Collector?
What Happens If You Never Answer Debt Collectors?
What Happens When a Debt Is Sold to a Collection Agency
What Happens When a Debt Is Sold to a Collection Agency?
What If a Summons Was Served to the Wrong Person?
What If an Order for Default Was Entered?
What if I default on an Avant payment?
What If the Wrong Defendant Is Named in a Lawsuit?
What Is a Case Number?
What is a Certificate of Judgment in Ohio?
What Is a Certificate of Service?
What Is a Civil Chapter 61 Warrant?
What is a Civil Litigation Lawyer?
What Is a Consent Judgment?
What Is a CPN Number?
What Is a Debt Brokerage?
What Is a Debt-to-Sales Ratio?
What Is a Defamation Lawsuit?
What is a default judgment?— What do I do?
What Is a Libel Lawsuit?
What is a Lien on a House?
What is a Lien Release on a Car?
What is a Lien?
What Is a Motion to Strike?
What Is a Motion to Suppress?
What Is a Non-Dischargeable Debt in Tennessee?
What Is a Nonsuit Without Prejudice?
What Is a Preliminary Hearing?
What Is a Reaffirmation Agreement?
What Is a Request for Dismissal?
What Is a Rule 3.740 Collections Defense in California?
What Is a Slander Lawsuit?
What is a Stipulated Judgment?
What Is a Warrant in Debt?
What is ABC Financial Club Charge?
What is ACS Ed Services?
What is Advanced Call Center Technologies?
What is Alimony?
What Is Allied Interstate's Phone Number?
What is an Affirmative Defense?
What Is an Assignment of Debt?
What Is an Attorney Malpractice Lawsuit?
What Is an Unlawful Detainer Lawsuit?
What is Bank of America CashPro?
What is Bitty Advance?
What Is Celtic Bank?
What is Consumer Portfolio Services?
What Is Credence Resource Management?
What Is Debt Internment?
What Is Discover's 60/60 plan?
What is Evading the Police?
What Is Extinguishment of Debt?
What is First Investors Financial Services?
What is Global Lending Services?
What is homicide?
What Is Lexington Law Firm?
What is LGFCU Personal Loan?
What is Moral Turpitude?
What is Online Information Services?
What is Oportun?
What Is Service of Process in Texas?
What is sewer service?
What Is Summary Judgment?
What is Synchrony Bank's Hardship Program?
What Is T-Mobile's Phone Number for Debt Collection?
What Is the Amount of Money You Still Owe to Their Credit Card Company Called?
What is the Deadline for a Defendant's Answer to Avoid a Default Judgment?
What Is the Formula for Calculating Closing Costs?
What Is the Minimum Amount That a Collection Agency Will Sue For?
What Is the Phone Number for IQ Data?
What is the Purpose of the Truth in the Lending Act?
What is the status of my case?
What Is the Statute of Limitations on Debt in Washington?
What is the Telemarketing Sales Rule?
What is Unsecured Credit Card Debt?
What is WCTCB?
What is WFDS?
What is WUVISAAFT?
What is Zombie Debt, and How Do I Deal With It?
What Personal Property Can Be Seized in a Judgment?
What Should I Do If Crown Asset Management Suing Me?
What Should I Do If OneMain Financial Is Taking Me to Court?
What Should You Do if You Can't Pay Your Mortgage?
What states require a professional licensing number for debt collectors?
When Does Exeter Finance Repo Cars?
When Is My Rent Due Legally?
Where’s My Amended Tax Return?
Which Bank Does Macy's Credit Card Use?
Who is EOSCCA?
Who is Over the Loan Forgiveness Program at KHESLC?
Who is Synchrony Bank? — Beat Them in Court
Who is Jefferson Capital Systems LLC — How to win in court
Why Being Judgment Proof Is Not a Defense to a Lawsuit
Why Can't Lawyers Give Legal Advice?
Who is Synchrony Bank? — Them in Court
Why Do Debt Collectors Block Their Phone Numbers?
Why Do Lawyers Charge So Much?
Why Is the Sheriff Looking for Me?
Why Would a Sheriff Come to My House with Papers?
Will Bankruptcy Stop a Judgment?

How-to debt guides

How to Beat Westlake Portfolio Management
How to Access Free Debt Relief
How to Answer a Lawsuit for Debt Collection
How to Appear in Court by Phone
How to Apply For Unemployment Benefits in Florida
How to Avoid Getting Served
How to Beat a Bill Collector in Court
How to Beat a Debt Collector in Court
How to Beat a Lawsuit From a Debt Collector
How to Cancel a Merrick Bank Credit Card
How to Cancel an American Eagle Credit Card: A Step-by-Step Guide
How to Cancel JCPenney Credit Card
How to Deal with Debt Collectors
How to decide what to do next in a lawsuit
How to Defend Yourself in Court
How To Develop A Debt Repayment Plan That Works
How to Discharge a Debt with UCC
How to Dispute a Debt and Win
How to Dispute a False Positive Drug Test
How to dispute a rental collection
How to Drag Out an Eviction
How to Fight a Motion for Relief From Automatic Stay
How to Fight an Eviction
How to Fight Debt Collectors in Court and Win
How to File a Civil Answer in Kings County Supreme Court
How to File a Civil Answer With the Duval Clerk of Courts - Florida
How to File a Motion to Extend Time
How to File a Motion to Satisfy Judgment in Utah
How to File a Motion to Set Aside Judgment
How to File Chapter 13 Without an Attorney
How to File in Bergen County Superior Court
How to File in Deschutes County Circuit Court
How to File in Josephine County Courthouse
How to File in Miamisburg Municipal Court
How to File in Monmouth County Courthouse
How to File in Oak Grove Courthouse
How to File in Oregon Small Claims Court
How to File in Small Claims Court in Iowa
How to File in the Houston County Superior Court
How To Fill Out the PLD-C-001
How to Find My Bridgecrest Login
How to Find Out If You're Being Sued
How to Find Out What Collection Agency Owns Your Debt
How to Find the Attorney That is Suing You (Secret)
How to get a case dismissed without prejudice on statute of limitations
How to Get a Divorce in Florida
How to Get Credit Card Debt Relief
How to Get Debt Relief (Ultimate 50 State Guide 2023)
How to Get Out of a Bridgecrest Loan
How to get out of a RISE loan
How to Get Out of Debt Before Retirement
How to Get Out of Paying HOA Dues
How to Get Relief From a Gambling Debt
How to Hire a Mediator
How to Identify Age Discrimination in the Employment Act
How to identify fake and abusive debt collectors
How to Liquidate Credit Cards Into Cash
How to liquidate your assets to pay off debt
How to Make a 609 Letter That Really Works
How to Make a Debt Validation Letter - The Ultimate Guide (2023)
How to Make a Motion to Dismiss
How to Make a Motion to Lift Stay
How to Make a Motion to Vacate Judgment
How to Make a Will
How to Make an Eviction Appeal
How to Make Motion to Set Aside — Ultimate Guide
How to Negotiate a Lien on a House
How to Negotiate Credit Card Debts
How to Paramount Recovery
How To Pay for College and Avoid Debt
How to Pay off Your Destiny Credit Card
How to Perform Voluntary Repossession
How to Protect Your LLC with a Registered Agent Service
How to Recover from a Negative Bank Balance
How to Report the Cancellation of a Debt on a 1040
How to Respond to a Debt Collection Summons in Wyoming
How to Respond to a Debt Lawsuit vs United Collection Bureau
How to Respond to a Lawsuit Against Northstar Location Services
How to Respond to a Sheriff's Note On Your Door
How to respond to a Summons from VanSlam, Inc
How to Respond to Plaintiff's Counsel
How To Respond to Request for Admission
How to Satisfy a Judgment
How to Spot Common IRS Scams
How to Stop Eviction Lawyers
How to Stop Pinnacle Collections Agency
How to Support Employees With Debt – HR Solution
How to Use a Bonus to Solve Your Financial Problems
How to Travel Without Falling into Debt: Embracing the "Workcation"
How to Use King County Superior Court Electronic Filing
How to Use Montgomery County E-Filing
How to use My.Loanbuilder
How to Use the Doctrine of Unclean Hands
How to Walk Away from Credit Card Debt
How to Win a Citibank Debt Lawsuit
How to Win a Collect Pros Dispute
How to Win a Credit One Bank Lawsuit
How to Win a Debt Lawsuit Against Security Credit Services
How to Win a Freedom Debt Relief Lawsuit
How To Win a Mariner Finance Lawsuit
How to Win a Portfolio Recovery Associates Debt Lawsuit
How to Win When Sued by Blitt & Gaines
How to Win When Sued by Pharia LLC
How to Win When You're Sued by Paragon Revenue Group
How to Write a Hardship Letter
How to Write a Re-Aging Debt Letter

Learn more with these additional debt resources

A Comprehensive Guide to Business Loans in the U.S.
Bar Associations for All 50 States
Bank of America Is Suing Me For Credit Card Debt — How to win
Best Debt Consolidation Strategies
Biggest Debt Collection Agencies (2023)
Budgeting for Language Learning: Tips for Language Enthusiasts in Debt
BYU Personal Finance Online Course (How to Get Back on Track After a Debt Lawsuit)
Collection Agencies Phone Numbers
Cómo resolver una deuda
Cómo responder a una demanda civil por deuda
Countersuing a Company: A Step-By-Step Guide
Credit Card Debt Forgiveness Act Explained
Credit Card Debt Forgiveness Because of Disability
Credit Repair Scam
Debt Collection Ageny List (2022)
Debt Collection Attorneys Near Me
Debt Collection Litigation Industry Report 2023
Debt Relief Programs 2023
Debt Validation Letter Template
Debt-Free Strategies: Leveraging Cash Value Life Insurance to Achieve Financial Freedom
Defending Yourself in Court Against a Debt Collector
Difference Between a Trial and a Hearing
Do This If You're Sued by Express Recovery for Debt
Don't Make a Payment to Arnold Scott Harris
Everything You Need to Know About Getting Divorced
Forging a Path to Debt-Free College: Innovative Approaches to Financing Your Higher Education
Free Legal Aid in Bullhead City, Arizona
Free Legal Aid in Marion, Ohio
Fruit of the Poisonous Tree
Going to Court for Credit Card Debt - Everything You Need to Know
Going to Court for Credit Card Debt — Key Tips
Guide to Elderly Debt Collection Laws
Hearing Vs. Trial
Help! A Debt Collector Is Calling My Work
Help! I'm Being Sued by My Debt Collector
Here Is Ocwen's Mailing Address
Here's the Phone Number for Colinfobur (a Debt Collector)
Hours of Service Violations - 10 Effects
How a CPA Can Save Your Small Business Money
How Attorney Contingency Fees Work
How Credit Counseling and Financial Education Can Help You Manage Debt
How Debt Affects Mental Health
How Do You Demonstrate Financial Hardship?
How Eviction Works for Renters
How I Won My Credit Card Debt Lawsuit (Interview)
How Legal Billing Software Streamlines Trust Fund Management
How Not to Pay a Judgment
How the Consumer Financial Protection Bureau Debt Collection Rule Applies to You
How VPNs Protect Your Financial Privacy and Assist in Debt Relief
I Got Sued Because of Credit Card Fraud—How I Beat American Express in Court
I'm in Debt With No Job and No Money — What to Do
Importance of Identity Verification for Buy Now Pay Later Providers
Interview With A Former Debt Collector
Is Zombie Debt Still a Problem in 2019
Kentucky Debt Collection Laws — What You Need to Know
Lawsuit Deadline Calculator (The best one!)
Legal Aid in All 50 States
Legal Aid in the US Ultimate Guide (2022)
Legal Support Services for Debt Collection
Liquidated Debt vs. Unliquidated Debt
Living Trust vs. Will—Which One You Need
Luxury on a Budget: 10 Ways to Have Luxury Experiences While Managing Debt
Make Solomon and Solomon PC validate a debt
Make Stephen Einstein validate a debt
Massachusetts Debt Collection Laws – What They Say
Money Management Tips for Senior Citizens
Motion for Default Judgment - Everything You Need to Know
My Bank Account is Negative $1,000 — Fix it
National Debt Relief Screwed Me — What to Do Next
Navigating Your Finances Wisely: A Look at the Best Credit Cards of 2023
New Debt Collection Laws 2022
Nonsuit vs Dismissal in a Debt Collection Lawsuit
Oregon Eviction Laws - What They Say
Overcoming College Debt Challenges: Top Strategies for Financial Freedom
Plaintiff vs Defendant — What's the difference
Pro Se Meaning
Q&A How to Resolve Your Debt Lawsuit (April 19, 2023)
Q&A: How to Resolve Your Debt Lawsuit (July 12, 2023)
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Assigning debts and other contractual claims - not as easy as first thought

Updates to UK Money laundering rules - key changes

Harking back to law school, we had a thirst for new black letter law. Section 136 of the Law of the Property Act 1925 kindly obliged. This lays down the conditions which need to be satisfied for an effective legal assignment of a chose in action (such as a debt). We won’t bore you with the detail, but suffice to say that what’s important is that a legal assignment must be in writing and signed by the assignor, must be absolute (i.e. no conditions attached) and crucially that written notice of the assignment must be given to the debtor.

When assigning debts, it’s worth remembering that you can’t legally assign part of a debt – any attempt to do so will take effect as an equitable assignment. The main practical difference between a legal and an equitable assignment is that the assignor will need to be joined in any legal proceedings in relation to the assigned debt (e.g. an attempt to recover that part of the debt).

Recent cases which tell another story

Why bother telling you the above? Aside from our delight in remembering the joys of debating the merits of legal and equitable assignments (ehem), it’s worth revisiting our textbooks in the context of three recent cases. Although at first blush the statutory conditions for a legal assignment seem quite straightforward, attempts to assign contractual claims such as debts continue to throw up legal disputes:

In Sumitomo Mitsui Banking Corp Europe Ltd v Euler Hermes Europe SA (NV) [2019] EWHC 2250 (Comm), the High Court held that a performance bond issued under a construction contract was not effectively assigned despite the surety acknowledging a notice of assignment of the bond. Sadly, the notice of assignment failed to meet the requirements under the bond instrument that the assignee confirm its acceptance of a provision in the bond that required the employer to repay the surety in the event of an overpayment. This case highlights the importance of ensuring any purported assignment meets any conditions stipulated in the underlying documents.
In Promontoria (Henrico) Ltd v Melton [2019] EWHC 2243 (Ch) (26 June 2019) , the High Court held that an assignment of a facility agreement and legal charges was valid, even though the debt assigned had to be identified by considering external evidence. The deed of assignment in question listed the assets subject to assignment, but was illegible to the extent that the debtor’s name could not be deciphered. The court got comfortable that there had been an effective assignment, given the following factors: (i) the lender had notified the borrower of its intention to assign the loan to the assignee; (ii) following the assignment, the lender had made no demand for repayment; (iii) a manager of the assignee had given a statement that the loan had been assigned and the borrower had accepted in evidence that he was aware of the assignment. Fortunately for the assignee, a second notice of assignment - which was invalid because it contained an incorrect date of assignment - did not invalidate the earlier assignment, which was found to be effective. The court took a practical and commercial view of the circumstances, although we recommend ensuring that your assignment documents clearly reflect what the parties intend!
Finally, in Nicoll v Promontoria (Ram 2) Ltd [2019] EWHC 2410 (Ch), the High Court held that a notice of assignment of a debt given to a debtor was valid, even though the effective date of assignment stated in the notice could not be verified by the debtor. The case concerned a debt assigned by the Co-op Bank to Promontoria and a joint notice given by assignor and assignee to the debtor that the debt had been assigned “on and with effect from 29 July 2016”. A subsequent statutory demand served by Promontoria on the debtor for the outstanding sums was disputed on the basis that the notice of assignment was invalid because it contained an incorrect date of assignment. Whilst accepting that the documentation was incapable of verifying with certainty the date of assignment, the Court held that the joint notice clearly showed that both parties had agreed that an assignment had taken place and was valid. This decision suggests that mistakes as to the date of assignment in a notice of assignment may not necessarily be fatal, if it is otherwise clear that the debt has been assigned.

The conclusion from the above? Maybe it’s not quite as easy as first thought to get an assignment right. Make sure you follow all of the conditions for a legal assignment according to the underlying contract and ensure your assignment documentation is clear.

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Assignment of Debt – What You Need to Know

By aqila zulaiqha zulkifli ~ 23 june 2023.

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Occasionally, to ensure liquidity and to reduce financial risk, a creditor may assign its rights to a debt repayment to another party. Such an arrangement is known as the assignment of debt.

An assignment generally means the transfer of contractual rights and liabilities to a third party without the concurrence of the other party to the contract. [1] The assigning party is known as the assignor, whereas the recipient party is known as the assignee.

Once an assignment occurs, the assignee stands in the exact position as the assignor and has the legal right to a debt, other remedies therein, and even the power to discharge the debt. The debtor must then, make all payments to the assignee, and not the assignor. In fact, if the debtor pays the assignor without the consent of the assignee, the debtor may risk having to pay the assignee all over again. [2]

An assignment of debt is governed by Section 4(3) of the Civil Law Act 1956 (the “Act”) (cited with approval in the Federal Court case of UMW Industries Sdn Bhd v Ah Fook [3] , in which, the elements of a statutory assignment of debt can be summarized as follows:

the assignment must be in writing under the hand of the assignor (and not, i.e the agent of the assignor);
the assignment must be absolute and not by way of charge only; and
the express notice in writing must have been given to the person liable to the assignor (i.e the debtor).

The effect of a statutory assignment is that the assignee possesses the legal right to the debt and the right to sue the debtor in respect of the debt without needing to join the assignor. [4]

However, rest assured, an assignment that is not in compliance with Section 4(3) of the Act is not automatically invalid. A non-statutory assignment could still be valid in equity [5] , though the assignee would have to join the assignor in the proceeding, either as a plaintiff or defendant [6] . This is to ensure a just disposal of the action, by ensuring that all relevant parties are before the Court so that the assignor would not make a claim against the debtor in respect of the same debt.

As such, in conclusion, before accepting an assignment of debt, it is prudent for an assignee to ensure that the elements in Section 4(3) of the Act abovementioned are fulfilled. If the assignment is meant to be absolute, such terms should be clearly reflected in the deed of assignment, or the assignee runs the risk of being crippled in a legal proceeding to recover the debt in the absence of the assignor.

[1] United General Insurance Co Sdn Bhd v Progress Credit Sdn Bhd [1988] 2 MLJ 297

[2] malayawata steel berhad v government of malaysia & anor [1980] 2 mlj 103, [3] [1996] 1 mlj 365, [4] mbf factors sdn bhd v tay hing ju (t/a new general trading) [2002] 5 mlj 536, [5] khaw poh chhuan v ng gaik peng & ors [1996] 1 mlj 761 (fc), [6] chan min swee v melawangi sdn bhd [2000] 7 clj 1.

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English law assignments of part of a debt: Practical considerations

United Kingdom | Publication | December 2019

Enforcing partially assigned debts against the debtor

The increase of supply chain finance has driven an increased interest in parties considering the sale and purchase of parts of debts (as opposed to purchasing debts in their entirety).

While under English law part of a debt can be assigned, there is a general requirement that the relevant assignee joins the assignor to any proceedings against the debtor, which potentially impedes the assignee’s ability to enforce against the debtor efficiently.

This note considers whether this requirement may be dispensed with in certain circumstances.

Can you assign part of a debt?

Under English law, the beneficial ownership of part of a debt can be assigned, although the legal ownership cannot. 1 This means that an assignment of part of a debt will take effect as an equitable assignment instead of a legal assignment.

Joining the assignor to proceedings against the debtor

While both equitable and legal assignments are capable of removing the assigned asset from the insolvency estate of the assignor, failure to obtain a legal assignment and relying solely on an equitable assignment may require the assignee to join the relevant assignor as a party to any enforcement action against the debtor.

An assignee of part of a debt will want to be able to sue a debtor in its own name and, if it is required to join the assignor to proceedings against the debtor, this could add additional costs and delays if the assignor was unwilling to cooperate. 2

Kapoor v National Westminster Bank plc

English courts have, in recent years, been pragmatic in allowing an assignee of part of a debt to sue the debtor in its own name without the cooperation of the assignor.

In Charnesh Kapoor v National Westminster Bank plc, Kian Seng Tan 3 the court held that an equitable assignee of part of a debt is entitled in its own right and name to bring proceedings for the assigned debt. The equitable assignee will usually be required to join the assignor to the proceedings in order to ensure that the debtor is not exposed to double recovery, but the requirement is a procedural one that can be dispensed with by the court.

The reason for the requirement that an equitable assignee joins the assignor to proceedings against the debtor is not that the assignee has no right which it can assert independently, but that the debtor ought to be protected from the possibility of any further claim by the assignor who should therefore be bound by the judgment.

Application of Kapoor

It is a common feature of supply chain finance transactions that the assigned debt (or part of the debt) is supported by an independent payment undertaking. Such independent payment undertaking makes it clear that the debtor cannot raise defences and that it is required to pay the relevant debt (or part of a debt) without set-off or counterclaim. In respect of an assignee of part of an independent payment undertaking which is not disputed and has itself been equitably assigned to the assignee, we believe that there are good grounds that an English court would accept that the assignee is allowed to pursue an action directly against the debtor without needing the assignor to be joined, as this is likely to be a matter of procedure only, not substance.

This analysis is limited to English law and does not consider the laws of any other jurisdiction.

Notwithstanding the helpful clarifications summarised in Kapoor, as many receivables financing transactions involve a number of cross-border elements, assignees should continue to consider the effect of the laws (and, potentially court procedures) of any other relevant jurisdictions on the assignment of part of a debt even where the sale of such partial debt is completed under English law.

Legal title cannot be assigned in respect of part of a debt. A partial assignment would not satisfy the requirements for a legal assignment of section 136 of the Law of Property Act 1925.

If an assignor does not consent to being joined as a plaintiff in proceedings against the debtor it would be necessary to join the assignor as a co-defendant. However, where an assignor has gone into administration or liquidation, there may be a statutory prohibition on joining such assignor as a co-defendant (without the leave of the court or in certain circumstances the consent of the administrator).

[2011] EWCA Civ 1083

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Legal Templates

Home Business Assignment Agreement

Assignment Agreement Template

Use our assignment agreement to transfer contractual obligations.

Updated February 1, 2024 Reviewed by Brooke Davis

An assignment agreement is a legal document that transfers rights, responsibilities, and benefits from one party (the “assignor”) to another (the “assignee”). You can use it to reassign debt, real estate, intellectual property, leases, insurance policies, and government contracts.

What Is an Assignment Agreement?

What to include in an assignment agreement, how to assign a contract, how to write an assignment agreement, assignment agreement sample.

Partnership Interest

An assignment agreement effectively transfers the rights and obligations of a person or entity under an initial contract to another. The original party is the assignor, and the assignee takes on the contract’s duties and benefits.

It’s often a requirement to let the other party in the original deal know the contract is being transferred. It’s essential to create this form thoughtfully, as a poorly written assignment agreement may leave the assignor obligated to certain aspects of the deal.

The most common use of an assignment agreement occurs when the assignor no longer can or wants to continue with a contract. Instead of leaving the initial party or breaking the agreement, the assignor can transfer the contract to another individual or entity.

For example, imagine a small residential trash collection service plans to close its operations. Before it closes, the business brokers a deal to send its accounts to a curbside pickup company providing similar services. After notifying account holders, the latter company continues the service while receiving payment.

Create a thorough assignment agreement by including the following information:

Effective Date: The document must indicate when the transfer of rights and obligations occurs.
Parties: Include the full name and address of the assignor, assignee, and obligor (if required).
Assignment: Provide details that identify the original contract being assigned.
Third-Party Approval: If the initial contract requires the approval of the obligor, note the date the approval was received.
Signatures: Both parties must sign and date the printed assignment contract template once completed. If a notary is required, wait until you are in the presence of the official and present identification before signing. Failure to do so may result in having to redo the assignment contract.

Review the Contract Terms

Carefully review the terms of the existing contract. Some contracts may have specific provisions regarding assignment. Check for any restrictions or requirements related to assigning the contract.

Check for Anti-Assignment Clauses

Some contracts include anti-assignment clauses that prohibit or restrict the ability to assign the contract without the consent of the other party. If there’s such a clause, you may need the consent of the original parties to proceed.

Determine Assignability

Ensure that the contract is assignable. Some contracts, especially those involving personal services or unique skills, may not be assignable without the other party’s agreement.

Get Consent from the Other Party (if Required)

If the contract includes an anti-assignment clause or requires consent for assignment, seek written consent from the other party. This can often be done through a formal amendment to the contract.

Prepare an Assignment Agreement

Draft an assignment agreement that clearly outlines the transfer of rights and obligations from the assignor (the party assigning the contract) to the assignee (the party receiving the assignment). Include details such as the names of the parties, the effective date of the assignment, and the specific rights and obligations being transferred.

Include Original Contract Information

Attach a copy of the original contract or reference its key terms in the assignment agreement. This helps in clearly identifying the contract being assigned.

Execution of the Assignment Agreement

Both the assignor and assignee should sign the assignment agreement. Signatures should be notarized if required by the contract or local laws.

Notice to the Other Party

Provide notice of the assignment to the non-assigning party. This can be done formally through a letter or as specified in the contract.

File the Assignment

File the assignment agreement with the appropriate parties or entities as required. This may include filing with the original contracting party or relevant government authorities.

Communicate with Third Parties

Inform any relevant third parties, such as suppliers, customers, or service providers, about the assignment to ensure a smooth transition.

Keep Copies for Records

Keep copies of the assignment agreement, original contract, and any related communications for your records.

Here’s a list of steps on how to write an assignment agreement:

Step 1 – List the Assignor’s and Assignee’s Details

List all of the pertinent information regarding the parties involved in the transfer. This information includes their full names, addresses, phone numbers, and other relevant contact information.

This step clarifies who’s transferring the initial contract and who will take on its responsibilities.

Step 2 – Provide Original Contract Information

Describing and identifying the contract that is effectively being reassigned is essential. This step avoids any confusion after the transfer has been completed.

Step 3 – State the Consideration

Provide accurate information regarding the amount the assignee pays to assume the contract. This figure should include taxes and any relevant peripheral expenses. If the assignee will pay the consideration over a period, indicate the method and installments.

Step 4 – Provide Any Terms and Conditions

The terms and conditions of any agreement are crucial to a smooth transaction. You must cover issues such as dispute resolution, governing law, obligor approval, and any relevant clauses.

Step 5 – Obtain Signatures

Both parties must sign the agreement to ensure it is legally binding and that they have read and understood the contract. If a notary is required, wait to sign off in their presence.

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Assignment of Debt UK – Everything You Need To Know

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In the complex financial landscape of the United Kingdom, understanding the nuances of ‘Assignment of Debt’ is essential for both creditors and debtors. This concept, often encountered but not always fully understood, involves the transfer of a debt obligation from the original creditor (the assignor) to a third party (the assignee).

This article aims to demystify the intricacies of debt assignment, explaining its types, legal implications, and impact on individuals’ financial standings.

Whether it’s about navigating through the differences between legal and equitable assignments, understanding the role of deeds, or grasping how such transactions affect your credit report and legal rights, this guide provides a comprehensive overview, ensuring that you are well informed about this critical aspect of financial management in the UK.

Table of Contents

What Does ‘Assignment of Debt’ Mean?

Assignment of Debt: a term that might sound complex, but it’s really quite straightforward. Let’s dive into what this means for you.

Simply put, your original creditor, known as the assignor, transfers your debt to another party, the assignee. This could change who you deal with regarding your debt. The assignee can now take legal steps to recover the debt from you. Thus, this might include court action.

How Debt Assignments Work

When a creditor offers credit to a borrower, they do so believing that the money they lend, along with the interest, is repaid on time. So, the lender waits to recover the money owed according to the timeframe stated in the contract.

In some situations, the lender might decide that they want to sell the debt to a third party because they no longer want to assume responsibility for servicing the loan. In this case, the debtor should be sent a Notice of Assignment (NOA). This should state that someone else is now responsible for collecting the outstanding debt. This is called a debt assignment.

It’s mandatory to inform the debtor when the debt is assigned to a third party so that they are aware of who they should pay the debt to. The payments won’t be accepted if the debtor ends up sending payments to the old creditor after they’re assigned. This might result in the debtor unintentionally defaulting.

Also, once the debtor receives this notice, it’s best that they verify that the new creditor has recorded the correct monthly payment and total balance. In some situations, the new assignee might even decide to make changes to the original terms of the loan. In this case, the creditor should notify the debtor without delay and give them sufficient time to respond.

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Legal Assignment vs Equitable Assignment

A legal assignment is when another company takes over the following from a creditor:

Benefit of a debt
The right to enforce the debt

This indicates that they have the right to seek court action over the loan.

However, when it comes to equitable assignment, it only transfers the benefit of the loan to a third party. In this case, there is no right to seek court action over the loan. Thus, in a situation where the assignee wants to take the debtor to court, they only have the right to work with the original creditor after the original creditor decides to take the debtor to court.

So, simply said, they don’t have the power to initiate court action themselves. Also, note that in order for the assignment to be effective, the debtor must be notified regarding the assignment. The debtor is obligated to make the payment to the assignee only after they get the notice.

Assignment vs Novation

When it comes to the assignment, the party that assigns will continue performing the obligation associated with the loan. However, the assignee is now entitled to the loan benefits.

For example, assume that you assign a debt, that a debtor owes to you, to another organisation. In this situation, you have some rights and obligations over the loan. But particularly the right to pursue legal action in court.

Meanwhile, when it comes to novation, it consists of a full transfer of both rights and obligations. For example, as per the previous scenario, the creditor would give the assignee company full power when it comes to both the obligations and the rights associated with the loan.

Assignment vs Selling

As mentioned before, the assignment of debt means that the right of an individual to collect a debt has been transferred legally from the assignor (original creditor) to the assignee (third party). Then, the debtors are informed regarding the assignment. They should then make the payments to the assignee.

However, keep in mind that the conditions and terms of the contract do not change.

When it comes to selling debt, this is where a lender sells their loan to another, usually for a lesser amount than what it’s worth. The buyer (most of the time a debt collection company) tries to collect the whole amount from the debtor.

Does an Assignment Need to be a Deed?

When delving into the law of assignment, a crucial question often pops up: is a formal deed essential to make the transfer of debt legitimate? The answer isn’t as straightforward as you might think. Let’s unpack this:

Often, a less formal agreement can do the job. However, in some cases, particularly when the original loan agreement was a deed, a deed for the assignment becomes necessary.

Understanding the importance of deeds in this context is key. If your original loan agreement was signed as a deed, the assignment might also need to be a deed. This adds a layer of formality and legal binding. A deed indicates a more serious commitment, making everyone involved fully aware of the transfer’s details.

Knowing your rights in these situations is non-negotiable:

Whether it’s through a deed or an agreement, you’re entitled to be informed about the assignment. This ensures the process is fair and transparent.
This notification is more than just a formality; it validates the transfer and helps you understand the change in your debt obligations.
The use of a deed or agreement provides legal clarity. This helps in understanding your position in the new arrangement.
In such situations, seeking legal or financial advice can be a wise move.

In the complex world of debt assignments, whether a deed is necessary depends on various factors. Understanding the role of deeds and your rights is essential in navigating these financial waters.

Benefits of Assignment of Debt

There are multiple reasons why a creditor might decide to assign the debt to another person. One of the main reasons for this is to improve liquidity or to reduce the risk. In some cases, the lender might also be wanting some capital urgently. Also, they might have accumulated a large amount of high-risk loans and be wary that most of them could default.

In such situations, lenders may be willing to assign them to another person swiftly, even for a very small amount. They are open to doing this as long as it will help to improve their financial outlook and appease worried investors.

In other cases, the creditor might decide the debt is too old to spend resources trying to collect it. They might even assume that since it’s old, it’s not worth assigning it to a third party to pick up the collection activity. In such an instance, a company will decide not to assign their debt to a third party.

Criticisms of Assignment of Debt

Even though the assignment of debt may seem like a good option for lenders, it also has a fair bit of criticism.

Over the past, debt buyers have been known to use various unethical practices in order to get paid. This includes constantly harassing debtors and issuing threats. In some situations, they have also been accused of chasing debts that have already been paid.

Additional Advice and Guidance

If you’re struggling with debt, note that there are many debt solutions available in the UK that you can consider taking up. Some of these include:

Individual Voluntary Arrangement (IVA)
Debt Management Plan (DMP)
Debt Relief Orders (DRO)

However, note that while the right debt solutions will help to write off debt, choosing the wrong one might worsen your situation. So, we recommend you reach out to a debt charity for advice before you make the decision. Some debt charities you can reach out to include:

National Debtline
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Alternatively, feel free to fill out our online form , and our MoneyAdvisor team will guide you.

It refers to the transfer of a debtor’s obligation from the original creditor (assignor) to a third party (assignee).
Legal Assignment: Transfers both the right to collect the debt and the right to enforce it legally, including court action.
Equitable Assignment: Only the benefits of the loan are transferred, not the legal right to enforce it.
Assignment maintains the original terms of the loan with a new creditor, whereas novation transfers all rights and obligations to a new party.
In assignment, the right to collect the debt is transferred, while selling involves a financial transaction where the lender sells the loan, often at a lower price.
Generally, a deed is not required for debt assignment, but it may be necessary when the original loan agreement is signed as a deed.
Assignment of debt will be reflected in the credit report, including any updates on the loan terms and the new lender’s name.
A formal notice is required, especially in legal assignments, to inform the borrower about the transfer of their debt.
Once a notice is issued, the new creditor assumes the rights and obligations of the debt and may engage in various debt collection methods.
Common reasons include avoiding the hassle of debt collection, lacking resources for legal action, or efficiency in debt collection through a third party like a collection agency.
Under UK law, most debts have a limitation period of six years (twelve for mortgage loans), after which they might be written off if there’s no contact from the creditor.

Under UK law, the limitation period for most debts is six years. For mortgage loans, it extends to twelve years. If your creditor hasn’t contacted you within these time frames, you may have legal grounds to have the debt written off. This includes personal loans, credit cards, payday loans, and others.

The new lender takes on both the obligations and rights of the mortgage loan. Though rare, borrowers can also assign their mortgage to someone else. These assignments are recorded with the county recorder’s office for legal purposes.

Your credit report will reflect the change in lender and any new loan terms. You’ll see the new lender’s name instead of the old one. If you default under the new lender, they will report this to Credit Reference Agencies.

Under the Property Act 1925, it’s a formal notification to the borrower that their debt has been acquired by a new company. This notice is required in cases of legal assignment.

The new creditor assumes the benefits and obligations of the debt. They may hire a collection agency or use other methods to recover the debt, often avoiding court action to minimise costs.

Assigning debt is often done to avoid the trouble of collecting it. Some may lack the resources to take legal action against debtors. If a third party, like a debt collection agency, can handle repayment collection more efficiently, it’s a preferred choice.

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Debt Assignment in Queensland – A Complete Guide

Home » News & Articles » Debt Assignment in Queensland – A Complete Guide

NEWS & ARTICLES

By Wayne Davis
| September 17, 2023

Article Summary

A debt assignment is an agreement where a debt, along with all its associated legal rights and responsibilities, is transferred from the original creditor to a third-party purchaser. Once verified, the third party, now termed the assignee, becomes the official owner of the debt and has the right to collect it.

A “chose in action” or a “thing in action” is a legal term referring to a personal or proprietary right in intangible personal property, enforceable through litigation. This is different from “chose in possession”, or a “thing in possession” which refers to tangible items one can physically possess, like a book or car.

The legislation in Queensland, specifically the Property Law Act 1974 (Qld), provides for assignments of things in action.

An absolute debt assignment refers to the unconditional transfer of property or rights, ensuring the original owner retains no interest. The assignment should be complete for clarity between the debtor and the new creditor.

Before the new creditor can collect the debt, a formal notice must be issued to the debtor. This ensures the debtor knows they have a new creditor. Requirements for a valid notice include it being in writing, signed by the assignor, and containing clear identification of the assignor, assignee, and the debt.

The responsibility of ensuring a valid notice falls on the assignee. Several guidelines and legal cases have highlighted the importance of serving the notice in a manner that is most likely to bring it to the debtor’s attention. This could involve registered post or personal delivery.

Once the debt is effectively assigned and the debtor notified, the assignee can collect the debt and undertake any necessary legal actions. Often, debts that are assigned come with their own challenges, as many are sold precisely because they are problematic.

Legal avenues like court proceedings, enforcement warrants, or bankruptcy can be pursued. Challenges may arise due to misunderstandings by the debtor, disputes about the validity of the assignment, or challenges proving effective delivery of the notice to the debtor.

Table of Contents

Are you a creditor in Queensland who is struggling with debt assignment and is looking for a way to effectively manage the assignment of their debts?

Dealing with debt can sometimes be a lot for creditors to manage. Between the multiple debts that their business will likely manage and potential problem debtors who don’t seem to want to pay their debt, debts can sometimes spiral out of control!

If this is the case for you or your business, it may be time to consider assigning your debt.

The assignment of a debt occurs when the creditor of a debt sells their debt to a third-party buyer. This process can be complicated to understand, so it is important that you perform due diligence and research before engaging in this process.

Typically seen with banks and credit card companies, creditors will sometimes package their debts into debt books or tranches and sell them, rather than collecting them.

In this article our debt recovery lawyers will discuss the basics of debt assignment in Queensland so that you, as a creditor, can better understand this process.

What is a Debt Assignment?

The first question that is to be asked about debt assignment is what it is and how it works?

A debt assignment is an agreement that transfers a debt , and all of the legal rights and responsibilities associated with it, from the creditor to a third-party purchaser.

This provides the third party with the right to collect the debt, while the creditor can no longer engage in the debt recovery process with the debt assigned.

Once an assignment of debt is verified, the rights will be transferred to the assignee and they will be the official owner of the debt, meaning that they can collect the debt for the money it is worth.

Chose in Action (Thing in Action)

The right to recover a debt is a “thing in action” or a “chose in action”.

A “chose in action” (often referred to as a “thing in action”) is a legal term that denotes a personal right without possession, or a proprietary right in personal property that is intangible and not in one’s possession, but enforceable through litigation.

Common examples of choses in action include debts, shares in a company, and other rights to receive something or have something done.

Contrast this with “chose in possession” which refers to something tangible that one can physically possess, like a book, a car, or money.

The phrase “chose in action” originates from old French and the term “chose” means “thing”.

In Queensland, the assignments of things in action are provided for in legislation, particularly at section 199 of the Property Law Act 1974 (Qld) (“ the PLA ”).

Section 199 of the Property Law Act

Section 199(1) of the PLA states:

(1) Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice— (a) the legal right to such debt or thing in action; and (b) all legal and other remedies for the same; and (c) the power to give a good discharge for the same without the concurrence of the assignor.

This part of the section means that a the right to recover a debt (being a thing in action) can be legally assigned. This assignment must be absolute and the debtor should receive a written notice, and obtaining the debtor’s consent for this assignment is not mandatory.

Section 199(2) of the PLA states:

(2) If the debtor, trustee or other person liable in respect of such debt or thing in action has notice— (a) that the assignment is disputed by the assignor or any person claiming under the assignor; or (b) of any other opposing or conflicting claims to such debt or thing in action; the debtor may, if the debtor thinks fit, either call upon the persons making claim to the debt or other thing in action to interplead concerning the same, or pay the debt or other thing in action into court under and in conformity with the provisions of the Act s relating to relief of trustees.

This part of the section says that if the debtor knows of disputes or conflicting claims regarding the assignment, they can either request claimants to clarify their stance or deposit the owed amount in court as per the Act’s guidelines.

These subsections raise some further questions, namely:

What is an “ absolute debt assignment ” at law?
What is a notice of debt assignment?

We will discuss these in further detail below.

What is an “Absolute Debt Assignment” at Law?

Absolute debt assignment refers to an unconditional transfer of property or rights, leaving no interest for the original owner.

Typically, it lets a creditor transfer their right to collect a debt to a third party. The debt assignment must be complete and without conditions for the benefit of both the debtor, who knows whom to pay, and the third party, who can legally claim the debt.

In Durham Brothers v Robertson [1898] 1 QB 765 , it was held that the document was not “an absolute assignment (not purporting to be by way of charge only)” and that the plaintiffs could not recover in the action. This was held because it was a charge. The Court said:

The document purports on the face of it to assign the debt, and it is not the less an absolute assignment because it contains, like any other mortgage, provisions that shew that it is only a security, and that there is a right to redeem. It is clear on the authorities that a mortgage with a power of redemption is an absolute assignment within the section.

In Clyne v Deputy Federal Commissioner of Taxation (1981) 150 CLR 1 , Mason J said at [24]:

An “absolute assignment” in the section signifies one which is unconditional.

In Austino Wentworthville Pty Limited v Metroland Australia Limited [2013] NSWCA 59 , Barrett JA said at [62], summarising the relevant principles emerging from the cases:

An “absolute” assignment is one that is unconditional and does not attempt to affect part only of the chose in action. The fact that an assignment otherwise absolute is accompanied by an express proviso for redemption, an implied right of redemption or the creation of a trust in respect of future proceeds does not deprive it of its absolute character. An assignment by way of charge is one the effect of which is to give a right of payment out of the subject matter assigned without outright transfer of that subject matter. Such an assignment occurs when, for example, there is a transfer of a right to be paid out of a particular fund or of so much of a debt as is sufficient to satisfy a future indebtedness. The character of the assignment must be ascertained from the terms and effect of the instrument, according to the construction of it as a whole.

So, to ascertain if the assignment is an absolute assignment, reference must be made to the contract (or deed of assignment), its terms and conditions, and read in the proper context.

Another requirement for an assigned debt to be valid is that the assignee must send a notice to the debtor.

What is a Notice of Debt Assignment?

Before the debt will be able to be collected by the new creditor, a notice of debt assignment must first be issued to the debtor. But what is this and what does it mean?

A notice of debt assignment is a formal notice that is issued to the debtor when a debt is assigned to a new creditor. The new creditor, or the assignee, must issue this notice to the debtor at their last recorded or known home address.

As a debtor, it is a sudden change to have a new creditor to whom they are making payments.

There may have to be a process of them switching details and making financial or legal arrangements to begin to make payments or to manage the debt in any other way of their choosing.

They should be provided the time to understand that they now have a new creditor, as this will likely be an unexpected change, and deal with their debt in the way that they choose, as they may have had previous arrangements or discussions with their initial creditor.

The purpose of the notice is to provide the debtor with this new information and to ensure that they begin making debt payments to the new creditor, rather than continuing to pay the previous creditor.

In Walter and Sullivan Ltd v J Murphy and Sons Ltd [1955] 1 All ER 853 , the court held that the following are the requirements of a valid notice of an assignment of a debt:

The notice must be in writing.
The notice must be signed by the assignor.
The notice must identify the assignor and the assignee.
The notice must identify the debt that is being assigned.

In Mango Boulevard Pty Ltd & Anor v Mio Art Pty Ltd & Ors [2016] QCA 148 , Fraser JA said at [34] citing the relevant authorities:

… to constitute valid notice, there must be some kind of formal notification by the assignee, or possibly by the assignor on his behalf, to the debtor in order to achieve the object described in the Walter & Sullivan case. This view is also consistent with the decision of the Court of Appeal in Talcott v John Lewis & Co Ltd [1940] 3 All ER 592, where it was held that a notice stamped by a creditor on his invoice stating that the invoice should be transferred and payment made to the assignee, was ineffective, both because it was insufficiently plain in its wording, and because it was not a notice sent by the assignee to the debtor.

Therefore, we would suggest that at a minimum, the written notice of debt assignment should include:

A notice that it is an assignment of debt.
The name and details of the assignor of the debt (old creditor).
As many particulars of the original debt to enable the debtor to identify the debt to which the notice relates.
All of the details of the assignee of the debt (new creditor).
Direction to pay the debt to the assignee and the new payment details.
Full particulars of the original debt amount, plus and costs and interest incurred.
How the debtor can discharge the debt by payment.
The assignment must be signed by the assignor.

It is important to note that the assignment does not need to be in any particular format. However, it is advisable to have a lawyer draft the assignment to ensure that it is valid and enforceable.

After you have a valid assignment contract or deed of debt assignment signed; and you have a valid notice of assignment drafted, you must now give the notice of debt assignment to the debtor.

Proper Service of the Notice of Assignment of Debt

The notice must be valid, and it is the responsibility of the assignee to ensure that the notice is valid. The notice of assignment must be absolute and in writing, and the new creditor (or old creditor) must ensure that the notice is delivered properly to the debtor.

Section 347 of the Property Law Act 1974 (Qld) sets out the general rules for serving notices under the Act. A notice may be served on a person:

By delivering it personally to the person.
By leaving it at the person’s usual place of abode or business.
By posting it as a letter addressed to the person at their usual place of abode or business.

If the person is unknown or absent from the State, the notice may be served in such manner as directed by the court.

The Act also provides that a notice posted as a letter shall be deemed to have been served, unless the contrary is shown, at the time when by the ordinary course of post the notice would be delivered.

In Anning v Anning (1907) 4 CLR 1049 , Griffith CJ said of the then equivalent of s 199(1) that:

The section does not say by whom the notice is to be given, but it is, I think, clear that it may be given either by the assignor or the assignee.

In Grayprop Pty Ltd v Maharaj International Pty Ltd [2001] QSC 387 , it was held that the posting of a notice to a post office box did not comply with s.347 so as to attract the deeming provisions in that section relating to receipt of the notice. In that case Philippides J referred to David Sarikaya v Victorian Workcover Authority [1997] FCA 1372 , where Black CJ held:

… a post office box is not, in my view, the “address of a place” at which a document may be “left” for a person. The ordinary notion of “post office box” is of a container at a post office into which mail that has been duly posted is placed by postal authorities for retrieval by or on behalf of the holder of the box. Whether or not such a box is, in this context, the “address of a place”, it is not the address of a place at which a document may be “left” by way of service.

In Walter and Sullivan Ltd v J Murphy and Sons Ltd [1955] 1 All ER 853 , the court held that notice of an assignment of a debt must be given to a debtor in a way that is reasonably likely to bring it to their attention.

In the case, the assignor had given the debtor notice of the assignment by sending a letter to their registered office. However, the debtor had moved office and the letter was never received.

The court held that the notice was not valid because it had not been given in a way that was reasonably likely to bring it to the debtor’s attention.

Therefore, some takeaways re. service include:

To give valid notice of an assignment of a debt, the notice must be given to the debtor in a way that is reasonably likely to bring it to their attention.
This may involve sending the notice by registered post or delivering it in person.
It is not enough to simply send the notice to the debtor’s registered office if the debtor has moved office and the notice is not received.

Enforcing an Assigned Debt

The debt has been assigned effectively and the notice has been delivered to the debtor. Now what?

The assignee is now entitled to collect the debt and to take any collection or legal action of their choosing.

As debts that are assigned are often somewhat problematic, as many sell problematic debts, legal action may be the choice that many take.

Commencing court proceedings and receiving and enforcing a judgement are some of the recovery options that assignees will have in the legal regard, such as enforcement warrants, bankruptcy , and issuing a statutory demand / winding up .

The recovery of an assigned debt can often raise several issues for assignees in the initial stages. There are several factors and occurrences that may cause these issues to arise, including:

Misunderstanding of the debt assignment process by debtors, resulting in confusion or refusal to pay, as they do not understand that they are paying their debt or the same debt as before.
As we have discussed, a debt assignment must be legal and valid. The debtor may raise a dispute regarding the validity of the assignment of debt, regardless of whether proper procedure was followed or not.
You must be able to prove that the notice of assignment was effectively validly provided to the debtor. If you have failed to keep proper records of the formation and delivery of the notice, you may struggle to prove that it was both valid and provided.
If the debtor had previously arranged any kind of understanding with the assignor, they may be able to take action against you for not fulfilling the arrangement, even if you were not notified about it before the sale. This, however, may constitute a breach of contract by the assignor, so you may be able to take action of your own if this turns out to be the case.

Benefits of Debt Assignment

There are several benefits for all parties involved in the assignment of debt, including;

For the Assignor:

The assignor, or the individual or party that is assigning the debt to a new creditor, benefits in several ways and circumstances by selling the debt.

For one, they will have an increased cash flow by being paid a larger piece of the debt in one payment, rather than smaller payments over an extended period, which can help them get their finances back on track or invest in their business.

They will also no longer have the risk of a debt, which may be unable to be collected due to insolvency or other reasons, mitigating risk from their business.

Furthermore, the time and resources spent dealing with the debt will no longer be required, freeing up their business resources for alternative use.

For the Assignee:

The assignee, or the new creditor of the debt, will also be privy to several benefits from the assignment of debt process.

As a debt purchaser , the chances are they will have access to resources or be experienced debt collectors who have the time and resources to focus on debt collection , increasing their chances of being paid.

They will also pay less than the debt is worth for the rights to collect it, leaving room for a large profit margin.

What to Consider in Debt Assignment

While there are many benefits that may be reaped from a debt assignment on either side of the matter, there are also some considerations that should be made. They include;

The assignor of the debt should consider if this process is the right one for them and their business. After all, if the debt was collected regularly, they would collect more money over time, rather than being paid a larger amount of the debt immediately but not the full amount at any point in time.

The suitability of assigning a debt is something that can only be decided based on the specific circumstances of the matter and of the assignor’s business, so they should take the time to consider.

If the assignor wishes to maintain a relationship with this debtor for any reason, they should also consider notifying the debtor separately.

The assignee of the debt has several considerations to make, also regarding the suitability of this process for them. They will be taking on the responsibility of collecting a debt, which can take time and resources, so this must be feasible for them to commit to.

They are also accepting the risk of not being paid the debt at all or receiving only a small amount of it, so this must be a consideration made.

There is also a process that must be followed once the debt has been assigned, as discussed, so this should be considered as something that must be completed.

Limitation Dates for Assigned Debts

An assignee of debt must ensure that they are within the limitations of actions acts for each State and Territory to legally commence recovery of the debt.

The purpose of limitations of actions acts is to limit the delay for creditors to take action against a debtor for outstanding monies.

The limitation period for a contract debt is six (6) years in Queensland, calculated from the point of breach.

Where an assignee has been assigned a debt, the point of breach will commence from the date the debt was assigned to the assignee.

However, in some circumstances, where a debtor acknowledges the debt or makes a payment in respect of the debt, the point of breach starts from the date of acknowledgement or the last payment made by the debtor.

Common Mistakes to Avoid when Assigning Debt

There are a few things that you should avoid when assigning your debt. These include:

Not having a written agreement : It is important to have a written agreement in place when assigning debt. This agreement should clearly identify the debt being assigned, the assignor, the assignee, and the terms of the assignment.
Not notifying the debtor : The debtor must be notified of the assignment in writing. This notice should be given to the debtor before they make any payments to the assignor.
Assigning debt that is not assignable : Not all debts can be assigned. For example, debts that are personal in nature, such as claims for defamation or assault, cannot be assigned.
Failing to comply with the applicable laws and regulations : There are specific laws and regulations that govern the assignment of debt. It is important to comply with these laws and regulations to ensure that the assignment is valid.

Here are some additional tips to avoid common mistakes when assigning debt:

Have a lawyer review the assignment agreement : A lawyer can help you to draft an assignment agreement that is valid and enforceable.
Use a registered post to send the notice of assignment to the debtor : This will help to ensure that the debtor receives the notice and that there is a record of the notice being sent.
Keep a copy of all documentation related to the assignment : This includes the assignment agreement, the notice of assignment, and any other relevant documents.

If you have any questions about assigning debt, you should consult with a lawyer asap.

FAQ on Debt Assignment in Queensland

Navigating the intricacies of debt assignment can be complex, given its multifaceted nature and the legal implications involved.

Whether you’re an assignor looking to transfer the rights to a debt or an assignee aiming to comprehend the dynamics of your new responsibility, it’s crucial to understand the entire spectrum of the process.

A debt assignment is a legal transfer of a creditor’s right to collect a debt to a third party, known as the assignee. Once assigned, the original creditor can no longer engage in the debt recovery process.

What is a “Chose in Action”?

A “chose in action” refers to a legal right without possession, like debts or shares in a company. It contrasts with “chose in possession,” which refers to tangible items like a car or book.

What does Section 199 of the Property Law Act 1974 (Qld) discuss?

It provides the legal framework for the assignment of things in action in Queensland, specifying that for a debt assignment to be valid, a written notice must be given to the debtor.

Do I need the debtor’s consent to assign the debt?

No, the debtor’s consent isn’t mandatory. However, they should receive a written notice of the debt assignment.

What is an “Absolute Debt Assignment” at law?

It refers to an unconditional transfer of rights, meaning the original owner retains no interest. This transfer allows the third party (assignee) to legally claim the debt.

What should a Notice of Debt Assignment include?

It should provide details about the original creditor, the assignee, specifics of the debt, payment instructions, legal implications, and the dates of assignment and notice.

Why is the notice important?

It’s a legal requirement for the assignment to be effective, ensures clear communication with the debtor, protects the assignee’s rights, and prevents potential disputes.

A Notice of Debt Assignment is a formal document sent to a debtor informing them that their debt has been transferred to a new creditor (assignee). This notice ensures the debtor makes payments to the new creditor rather than the original one.

Why is a notice of assignment of debt necessary?

It allows the debtor to understand and adapt to the unexpected change in the party to whom they owe money. It also gives them time to arrange their finances or change any existing agreements made with the original creditor.

What are the requirements for a valid Notice of Debt Assignment?

Based on legal precedents for a Notice of Debt Assignment to be valid it must be in writing; It should be signed by the original creditor (assignor); and it should identify both the assignor and the assignee; and the specific debt being assigned must be detailed.

What should be included in a well-drafted Notice of Debt Assignment?

A well-drafted Notice of Debt Assignment should include a statement clarifying it as an assignment of debt; details of the assignor (original creditor) and the assignee (new creditor); comprehensive information on the original debt, including any additional costs and interest; instructions on how to make payments to the new creditor; the method to finalise the debt payment; and the signature of the assignor.

How should the notice be served to the debtor?

For effective service, the notice should be personally delivered to the debtor; or left at their usual residence or place of business; or posted as a letter to their regular address. However, precautions should be taken regarding post office boxes as they might not comply with certain legal provisions.

What are the implications if the notice isn’t properly served?

A notice must be delivered in a manner that makes it likely to come to the debtor’s attention. Improper delivery can render the notice invalid. For instance, merely sending it to a moved office or a post office box might not suffice.

Does the format of the assignment need to be specific?

No, there isn’t a mandatory format. However, having a lawyer draft the notice ensures its validity and enforceability.

Who can issue the Notice of Debt Assignment?

Either the assignor or the assignee can issue the notice.

What does it mean when a debt is assigned?

When a debt is assigned, it means the original creditor (assignor) has transferred their rights to collect the debt to a new creditor (assignee). This transfer requires a formal notice to be given to the debtor.

After a debt has been assigned, who is responsible for collecting it?

The assignee, or the new creditor, is now responsible for collecting the debt. They can choose any legal collection method, which might include court proceedings.

What issues might arise after the assignment of a debt?

Issues can arise from misunderstandings by the debtor, challenges to the validity of the assignment, lack of proper documentation to prove the notice was provided, or previous agreements with the assignor that were not known by the assignee.

How does the assignor benefit from assigning a debt?

Assignors can benefit from an immediate influx of cash, reduction in the risk of non-collection, and a decrease in time and resources spent on collection efforts.

How does the assignee benefit from purchasing an assigned debt?

Assignees typically purchase debts at a reduced rate, giving them a chance for a higher profit margin upon collection. Additionally, experienced debt collectors might have the resources and expertise to effectively recover debts?

Are there any considerations to be made before assigning or accepting a debt?

Yes. Assignors should evaluate if debt assignment is suitable for their business situation and consider notifying the debtor separately. Assignees must weigh the commitment of resources against the potential risk of non-collection and ensure they understand and follow the necessary post-assignment processes.

Is there a time limit for the assignee to take action on a debt?

Yes. The limitation period for a contract debt is typically six years from the point of breach. However, this might vary if the debtor acknowledges the debt or makes a payment.

Are there common mistakes made during debt assignments?

Some common pitfalls include not having a written agreement, failing to notify the debtor, assigning non-assignable debts, and not adhering to relevant laws and regulations.

How can I ensure that the assignment process goes smoothly?

It’s advisable to consult with a lawyer, use registered post for notices, and keep thorough documentation of every step in the process.

Can all debts be assigned?

No. Some debts, especially those personal in nature like claims for defamation or assault, cannot be assigned. Always check the nature of the debt and legal stipulations before proceeding.

Wayne Davis

Disclaimer: The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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Assignment of Debts under the Insolvency and Bankruptcy Code

[ Aayush Mitruka is a lawyer based in Delhi]

Synergies Dooray Automotive, the first corporate entity to be resolved under the new Insolvency and Bankruptcy Code ( Code ) posed a few very interesting questions and highlighted some grey areas in Code. In the present post I intend to discuss one important issue that came up in the context of assignment of debts.

To put things in perspective, the Code stipulates that after the National Company Law Tribunal ( NCLT ) admits an insolvency application, the Insolvency Resolution Professional ( IRP ), among other things, constitutes a committee of creditors ( CoC ) on the basis of claims received against the corporate debtor. The committee comprises all the financial creditors of the corporate debtor, and they are assigned voting shares based on the size of their debt. However, a related party to whom a corporate debtor owes a financial debt does not have any right of representation, participation or voting in the meetings of the CoC.

Before discussing the issue, it will be beneficial to allude to the brief facts of the Synergies Dooray case. In November 2016, just a week before the Code became operational, Synergies Castings, a sister concern of Synergies Dooray, assigned a major portion of its debt to third-party Millennium Finance by way of three assignment deeds. Note that Synergies Castings had acquired the debt from a consortium of banks by way of a one-time settlement in 2011. In the usual course, Synergies Castings, being a related party would not have been permitted to participate/vote in the meetings of the CoC. Therefore, the maneuvering had secured Millennium Finance ( Millennium ) a place in the CoC.

Understandably, there is no reason to complain when a creditor (related party or otherwise) assigns its loan to somebody, as that is well within their rights. However the important question is whether the assignee should get a seat in the CoC by virtue of the assignment? The Code does not seem to directly provide any answer in this regard. [1]

This particular question came up for consideration in an application filed by Edelweiss Asset Restructuring Company Limited ( Edelweiss ) against Synergies Dooray. Edelweiss challenged the assignment and the constitution of the CoC (which included Millennium), alleging that the assignment of debt by Synergies Casting to Millennium was carried out with the ulterior motive of reducing its (i.e. Edelweiss’) voting rights. It was also argued that the assignment deeds were inadequately stamped and unregistered. However, Edelweiss’ argument did not find favour with the NCLT, Hyderabad and while rejecting the application, the NCLT remarked :

“29. Therefore, the assignment deeds between the two entities also legal and permissible. At most it can be said to be similar to “tax planning” rather tax avoiding. Because of this assignment deed, not only the applicant’s share in total debt is reduced, but other financial creditors/Assignees share also proportionately reduced and they did not object to the same but only the applicant agitates with oblique motive/reasons best known to it. Therefore, a fraudulent attempt made to reduce the Applicant’s share in the total voting rights is not a plausible plea by the Applicant. In the absence of any documentary proof/evidence to the claim of the Applicant, the same is liable to be rejected. Accordingly, the bench rejects the above allegations/claim of the applicant.”

[Emphasis supplied]

Although the NCLT held that such an assignment was legal and permissible, it did not delve into the critical aspect of whether such an assignment would secure the assignee a seat in the CoC. The reasoning provided does not appear very convincing. This question ought to have been discussed at length. A reading of the above quoted paragraph also brings to fore that the decision lends it approval to an assignment undertaken even with the sole objective of securing a seat in the CoC because it is akin to “tax planning”. Edelweiss has preferred an appeal before the NCLAT and the matter is currently pending for its decision.

This issue was once again considered by the NCLT, Mumbai in the case of Fortune Pharma Private Limited . Interestingly, in this case, after filing applications initiating the corporate insolvency resolution process ( CIRP ) but before its admission, two related party creditors assigned their debts to an unrelated third party. Naturally, this diminished the voting share of the applicant creditor, who then filed an application contending that the assignments were executed with an ulterior motive. The NCLT held that disqualification that existed at the time of initiating the CIRP cannot be removed by a mere assignment. It noted that assignment is transfer of one’s right to recover debt to another person and that the rights of the ‘assignee’ are no better than those of an ‘assignor’. Accordingly, the assignee does not get the right to change its status from ‘related’ to ‘unrelated.’

In other words, the NCLT, Mumbai reasoned that since at the inception of the debt it belonged to a related party (who is barred to participate in the proceedings of CoC), the assignment of such a debt will not remove the bar. In my view, though the NCLT was correct in debarring the assignee from participating in the proceedings of the CoC, however the reasoning provided does not appear to inspire much confidence because of the following reasons.

First, it is important to understand that the bar is on the person who is holding the debt and not the nature of the debt per se. It will not be entirely correct to bar somebody (who is otherwise eligible) from voting just because it bought the debt from a related party. Imagine a situation where an original creditor (unrelated) assigns a debt to a related party. Now when this related party creditor assigns a debt to an unrelated X in the usual course of business, will X in this case be barred since at some point in time the debt was held by a related party? The answer to this has to be in the negative.

Second, this will prove to be counter-productive and have unintended repercussions. It will strongly discourage genuine asset reconstruction companies or other interested parties from buying the debt from any related party creditor. Surely, the Code could not have intended to hinder assignments which are undertaken in the usual course of the business.

Third, how do we exactly deal with situations when a CIRP application is being made by an operational creditor under section 9 of the Code? An operational creditor needs to deliver to the corporate debtor a demand notice as per section 8 before invoking section 9. Do we, in these cases, also allow an assignment before filing of an application? It would be impractical to have a one-size-fits-all approach.

The two views and the approaches adopted by two benches of the NCLT on this critical question throws open a can of worms. Let us try to closely examine this issue.

Assignment is essentially a contractual concept and refers to an agreement by which the rights and obligations of one party can be transferred to another. By virtue of assignment, the assignee steps into the shoes of her assignor and agrees to be both bound by it and is entitled to enforce it. Further, to be valid, an assignment agreement must satisfy the requirements under the Indian Contract Act, 1872 ( Act ). Accordingly, an assignment agreement can be declared void under section 23 of the Act if the object of the assignment agreement is (a) of such a nature that, if permitted, it would defeat the provisions of any law; or (b) fraudulent; or (c) involves or implies injury to the person or property of another; or (d) the court regards it as immoral, or opposed to public policy.

At this juncture, it is significant to examine if the NCLT (which exercises summary jurisdiction) would have the power to undertake such an investigation or would it be the prerogative of a civil court? The language of section 60(5)(c) of the Code seem to suggest that the NCLT will have the authority since this will be a “ question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code .”

It cannot be the intention of the Code to allow the promoters to appoint a proxy on the CoC by means of an assignment. It is a well settled principle of law that what may not be done directly cannot be permitted to be done indirectly. However, at the same time it must also be borne in mind that the Code does not aim to discourage any bona fide assignments. In the absence of any guidance in the Code, in order to determine the validity of such assignments, the NCLT ought to investigate the objective behind the assignment. In this regard, the time and the circumstances under which the assignment is made would be one relevant factor. Among other factors, the NCLT may also consider if the assignment is executed in the usual and ordinary course of the business.

This issue undermines the efficiency of the Code and therefore warrants serious consideration. The Code envisages provisions for scrutinizing certain transactions which may compromise the CIRP. One way to address this issue could be by amending the law to include such assignments also within its ambit. Pertinently, under section 240 of the Code, the Insolvency and Bankruptcy Board of India has the power to make regulations. However, since Parliament has been quite proactive in the past in preventing the promoters trying to game the system, it would not be surprising if an amendment is brought in to bring some clarity. It remains to be seen how and when this issue does gets finally elucidated.

– Aayush Mitruka

[1] Regulation 28 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 does not address this issue.

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Thanks for the above post. Its very helpful. Can you share a draft Assignment Agreement as per IBC?

Ad Mr Ayush. Sir.we have settlements our loans with J.M Arc on 12.8.15 in rs 7 Cr.J.M ARC not given permission to sell extra open land to deposit upfront 25% payments. Hence company not sine agreement. B.J.M ARC revoked on 11.12.15.J.M ARC file petition with NCLt for rs 14.5 cr in application. Pls advice your view.

With respect to Mr Mitruka’s views on the issue of assignment, I humbly submit that no amendment in the Code is called for. The Code, in several places, has expressly equated a creditor (by virtue of a business deal) with a creditor who has simply acquired a debt from another, say through assignment. Once the assignment agreement comes out unscathed, the assignee (of any debt) is as much a creditor as any other creditor. So, post the assignment, Millenium is a creditor in his own right. This way there is no question of any ‘related party’. A financial creditor gets a seat in the CoC, irrespective of his lineage. This should be looked at in this simple manner. In the proceedings before NCLT, Hyderabad, all that was said was that these 3 Agreements smacked of malafide because their date of signing was so close to the date of SICA Repeal . To be sure, I fail to see the connection between the two. It was known to all and sundry that SICA Repeal will be brought into force as soon as NCLTs got ready to be constituted.What was the fault of the Assignor or Assignee , even if agreements were signed on the very day on which SICA Repeal was made effective. Edelweiss does not appear to have led any evidence to show that the parties were planning to get around the section 21(2) by signing those assignment agreements. In fact, if the objective was just to get around this section, the date of signing did not need to be close to the date of SICA Repeal coming into effect. Neither NCLT nor the RP could afford to waste time on mere allegations unsupported by any evidence.

Please sir help…. Bank insolvency pr assignment ready krna h… So plz explain I am so very confused..

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