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:
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.
The Law of Property Act, 1925, lays down the requirements for both types of assignment. The criteria for a Legal Assignment include:
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.
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.
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.
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