Notice of Assignment of Debt – What You Can Do
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Debts and debt collection are part and parcel of our modern life. We all know someone who has had to deal with a debt collector – maybe we ourselves have dealt with debts and debt collector first-hand.
The world of debt collectors is a complicated world, with lots of different things to consider. One of these things is notice of assignment of debt. It may seem like a confusing and frightening term, but in this following article, we answer what notice of assignment of debt is, and how you should go about dealing with it.
Notice of Assignment of Debt
When it comes to debt and debt collecting, they often use quite complicated and confusing terms to describe what are sometimes quite simple things. This is the case with the official definition of notice of assignment of debt.
Being in debt is confusing anyway, but getting a letter through the door from a company you’ve never heard of or had dealings with before, asking you to make payments to them instead can further confuse things. This is actually a notice of assignment of debt itself. We’ll go into the official terminology.
What is it?
According to Thomson Reuters Practical Law, a notice of assignment of debt is ‘a form of notice to a third party notifying them of the assignment of a debt’. What does that mean, you might ask?
Well, StepChange, one of the biggest charities focussing on debt and financial advice in the UK, have a simpler explanation. A notice of assignment of debt is ‘a letter about a debt that has been sold on to a third party, such as a debt collection agency’. Importantly, they aren’t demands of payment – they are only sent to you for information only.
What types of notice of assignment of debt are there?
You may think you have a grasp on what notice of assignment of debt is. It gets slightly more confusing, unfortunately, as there are two distinct types of notice of assignment of debt. These two types are Legal and Equitable.
A legal notice of assignment of debt gives the purchasing company (the company that have bought the debt) the power to enforce the amount you owe. You will also end up making payments to this company instead of the original creditor.
A notice of assignment of debt that is described as ‘equitable,’ means that only the amount owed by you to the original creditor is transferred to the third party, or debt collection agency. In these instances, the company who purchases the debt cannot enforce it, and the original creditor will still retain their original rights and responsibilities.
Why do creditors sell debts?
One of the most common questions in regard to notice of assignment of debt is why the original creditor sold the debt in the first place? And how can they sell it anyway?
It is, in fact, perfectly legal for the original creditor to sell the debt to another company. Often they include a clause in the fine print when you sign any sort of credit agreement – it usually states that they are able to assign their rights to a third party. This inevitably means that you cannot dispute it.
Notice of assignment of debt – how to deal with it
So what does a notice of assignment of debt mean for you? To put it very simply, it means that you now owe a different company money. You will be told in the notice of assignment of debt letter about which company has acquired the debt, so going forwards, you should be dealing with them.
Many people believe that it is a blessing in disguise having a notice of assignment of debt. The new company may be easier to deal with, or may even be more flexible when it comes to interest rates and charges, which gives you more scope to paying back your debt quickly and easily.
Getting your debt paid off is in both yours and your creditors best interests. It will mean you don’t have to deal with lots of strongly-worded letters and phone calls, and it means that they don’t have to consider further action against you.
With a notice of assignment of debt, you may be able to arrange a suitable payment plan to repay the outstanding amount with the new company. Often these third parties are dedicated debt collection agencies, and deal with debts like yours every day. This means that they are set up to deal with any repayment plans and could offer interest freezes.
We go through a few of the more commonly asked questions about notice of assignment of debt, and what it might mean for you.