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.

How can I build my personal credit score?

6th March 2019

Your personal credit score plays an important part in securing new loans and credit, and can affect your financial life for better or worse. Lenders use the information in your credit file to determine whether you present a high risk of default, and if your credit score is low, you may find it difficult to […]

Read more

Could a Credit Union help with my cash flow problems?

5th March 2019

Credit unions offer a range of financial products including current accounts, savings accounts, and loans, and can be a good alternative to banks and building societies whilst also helping your cash flow. There are credit unions all around the UK, almost 100 of them operating in Scotland. They’re not always widely advertised, however, and although […]

Read more

Help – my monthly outgoings exceed my income

4th March 2019

It’s a worrying situation when you realise your outgoings exceed your income, and it can be difficult to prevent debt in this situation, but there are solid steps you can take to get back on track – you just need to act quickly. Increasing your income or reducing the money going out are essentially what […]

Read more

Benefits and tax credits when you’ve lost your job

1st March 2019

If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work. As far as your old employment is concerned, it’s important that you check your final wage slip to […]

Read more

How has the Mond ruling changed PPI claims after a Trust Deed?

26th February 2019

If you are a Scottish resident in financial difficulty, you may have entered into a Trust Deed in order to restructure debt repayments to creditors. A Trust Deed is a fixed voluntary agreement made between the debtor and creditor, with the help of a trustee. Debt is broken down into smaller, affordable instalments, typically lasting […]

Read more

Which debts can be included in a Debt Arrangement Scheme (DAS)?

21st February 2019

A Debt Arrangement Scheme (DAS) is a government backed scheme which allows you to repay debt through contractual, monthly instalments without the threat of legal action and incurring penalties or interest. The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy. A Debt […]

Read more