Fraser is swimming in debt. His student loan is stacked high. He’s got store cards maxed out with interest spiralling every day. Plus he’s still got his mortgage to cough up for at the end of the month. There’s just too much to keep track of.
But now things have got even more complicated. Just the other week, he received a “Notice of Assignment” in the post telling him that he now owed one of his debts to a new company, not the original creditor.
Now a few weeks on, he has started hearing from a company claiming to be a debt collecting agency. The whole situation has really confused Fraser and he’s starting to worry that it’s all just a scam. At the same time, if it is legitimate, he doesn’t want to get into any further trouble. Things are bad enough as they are.
If you’ve received a Notice of Assignment recently and you’re not sure what to do, this article will help you out. We’re going to discuss exactly what a Notice of Assignment is and how it works, the role of debt collection agencies, the different types of debt assignment, and what you should do if you receive one of these notices.
What is a Notice of Assignment?
A Notice of Assignment is a legal document that notifies a debtor (in this case, Fraser), that a new company (assignee) has ‘purchased’ ownership of their debt from the creditor (assignor).
It should lay outthe total amount of debt owed, the full name of the assignee who has acquired his debt, and it should state that the debtor now owes their debt to that particular assignee instead of his original creditor.
The Law of Property Act 1925 entitles the creditor to proceed with the Notice of Assignment. The act requires the creditor to inform the debtor that their debt has been reassigned to a third party.
It is normal for the newly assigned creditor to hire a debt collection agency to carry out the repayment proceedings for them not long after the Notice of Assignment has been issued.
What is the role of the Debt Collecting Agency?
When creditors are attempting to recover money owed to them by debtors, they often get in touch with debt collecting agencies. These agencies specialise in collecting the debts on behalf of the creditor.
There are two ways in which debt collecting agencies usually work in Scotland:
Buying Debt: Assignors have the legal right to assign your debt because a clause in your contract grants them legal permission to ‘sell’ your debt on without notifying you. In this instance, the debt collection agency becomes the legal owner of your debt and collects the full amount to be paid from you.
On Behalf of Creditors: The original creditor continues to own the debt, using the resources of the debt collection agency to contact you. The agency will usually be paid a percentage of the amount collected from the debtor.
If you’re not sure who the owner of your debt is, just check who the payments are to be made out to. If the payment is to be made to the assignor, they will still be the owner of your debt.
Different types of Debt Assignment
There are two types of assignment that creditors can impose: Legal Assignment and Equitable Assignment.
A legal assignment gives the assignee purchasing the debt the power to enforce the debt.
The purchasing company will inform you that you need to make all future payments to them, not your original creditor.
The Law of Property Act 1925demands that the legal assignment must be delivered in writing – formally recognised as the Deed of Assignment.
The legal assignment must be an absolute assignment in writing that has been signed under the hand of the assignor. This confirms the complete, legally binding transfer of ownership from assignor to assignee.
An Equitable Assignment ensures that only the monetary amount owed by the debtor is assigned to the assignee.
Unlike a Legal Assignment, the purchasing company cannot enforce or chase up the debt because the original creditor retains their rights and responsibility.
The only significant difference between equitable and legal assignment is that the equitable assignee often cannotbring an action against a debtor in their own name.
Essentially, you’ll pay the new assignee your debt, but they’re not allowed to chase you up for it themselves. They can only do so with the assignor.
What should I do after receiving a Notice of Assignment?
First thing’s first – don’t panic. A Notice of Assignment is, in essence, an alternative method of repaying your debt. We know it can be a stressful period of time, which is why we are here to help you every step of the way.
Do not ignore your notice of the assignment – Further legal action can be taken if your account continues to default.
Respond quickly – When the assignee contacts you via letters or phone calls, respond as quickly as possible. Make sure to check that all the details are accurate and the debt is correct. Dispute it if there is an error.
Ask about repayment plans and interest rate freezes – The new company is often more flexible in terms of being able to freeze interest rates and charges, allowing your debt to be paid off faster. The new creditor may be open to negotiating an affordable repayment plan which ensures no further legal action is taken.
Be polite and build a rapport – They may seem like the bad guys, but repaying your debt is in the main interests of both parties, and gives you the opportunity to turn your notice into a positive, debt-free result.
What should I do if I have another form of debt solution?
If you are currently enrolled in another debt solution scheme such as a Trust Deed, Debt Arrangement Scheme or Sequestration, it is essential to let the company involved in your original agreement know about your Notice of Assignment. They will take it forward and contact the assignee to discuss the payment of your current arrangement.
If you are handling your own debts personally, you need to cancel your payments to your existing company and arrange a new payment to the new creditor. In this particular case, you may also be asked to show the assignee/debt collecting agency up-to-date financial records.
Who can I talk to?
If you have received a Notice of Assignment or are struggling with the assignment of debt process, please don’t hesitate to reach out.
At Scottish Debt Experts we are here to help and offer guidance for anybody struggling with debt. It often takes just one phone call to clear things up.
We’re available by telephone, email or face to face if you prefer and will always arrange a call back within 24 hours. Email us at email@example.com or phone us at 0141 483 7477 between 9am-5pm Monday to Friday.
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1 According to the Annual Report from the Accountant in Bankruptcy. (https://www.aib.gov.uk/about-aib/statistics-data/aib-annual-reports-1986-present)
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