What is a Notice of Assignment?
April 7, 2016
A Notice of Assignment is used to inform debtors that a third party has ‘purchased’ their debt. The new company (assignee) takes over collection procedures, but can sometimes hire a debt collection agency to recover the money on their behalf.
There are two types of debt assignment:
- Legal Assignment
- Equitable Assignment
If a Legal Assignment has been made, part of the purchasing company’s obligations are to inform you of the situation via an official Notice of Assignment, and let you know that payment should be made to themselves rather than your former creditor.
Legal and Equitable Assignments
The Law of Property Act, 1925, lays down the requirements for both types of assignment. The criteria for a Legal Assignment include:
- It must be made in writing (Deed of Assignment)
- Notification must be sent to the borrower (Notice of Assignment)
- The assignment must be absolute
Legal Assignment gives the assignee powers to enforce the debt, unlike an Equitable Assignment where the purchasing party is unable to take enforcement action in their own right.
Under an Equitable Assignment, only the amount owed is assigned, and not the original creditor’s rights and responsibilities.
What happens after a Notice of Assignment has been issued?
The Legal Assignment process ensures that all the rights and responsibilities of the original lender are adopted by the assignee. Sometimes the purchasing company has in-house collection procedures, or uses the services of a third party debt collection agency.
As far as your credit file is concerned, the company taking on the debt will notify the Credit Reference Agencies of any default once repayments have started. You’ll see a name-change on your credit record in respect to this debt. The previous company’s name should be removed, and any default will now be associated with the new creditor.
The assignee may decide to hire a debt collection agency to collect the debt in full, in which case you should respond quickly to phone calls and letters. The debt collection company may be open to negotiations for a repayment plan, rather than taking further action against you.
Are there any benefits for you if your debt is assigned?
If you were previously having difficulty in repaying your debt, you may find that the new creditor has more flexibility to freeze interest and charges, allowing you to pay off what is owed more quickly.
Agreeing a sustainable plan for repayment is in their interests as well as yours – they won’t need to take further action if you’re able to keep up the payments, and in this way receiving a Notice of Assignment can be a positive outcome.
Scotland Debt Solutions helps residents in Scotland to free themselves from debt. We offer advice and guidance on what to do if creditors are pursuing you for payment, and operate from five locations around Scotland. Call today for an initial meeting free-of-charge.
When taking out a joint loan, there are many things you need to consider. Signing up to a joint credit agreement is a huge commitment and it’s important to ensure you have all the facts before signing on the dotted line. While no one wants to think about a relationship breaking down, the truth is […]
If you’re looking to save some money it’s a good idea to make a detailed budget that lets you see where your cash is currently being spent, and offers an overall view of your finances. You’ll need to collect together your income and expenditure details, including annual costs such as insurance, car expenses, birthdays and […]
A trust deed is a common debt repayment programme based around a voluntary arrangement made between you, your creditors and a qualified independent trustee who takes control of your debt repayments for a typical period of four years. If you’re having difficulty paying your debts and have assets or a regular income, you may qualify […]
If you have built up debt from gambling, you may be able to write off part or all of the debt via a formal Scottish insolvency route. Not all insolvency solutions allow debts to be written off, but you may be eligible for a trust deed if you meet certain criteria, with sequestration also being a possibility […]
Her Majesty’s Revenues and Customs (HMRC) is one of the biggest creditors in Scotland, and indeed across the rest of the UK. Millions of people make payments to the government through HMRC in the form of income taxes, National Insurance and VAT every year. For the majority of people in employment, this is done automatically […]
Council tax is a charge levied on residential property and payable to the local council. While some properties are exempt from paying council tax, most households must factor this bill into their monthly budget. Households will be given a yearly charge which can then be broken down into a series of monthly instalments throughout the […]