Notices of Assignment (NOA) are used to inform you that a third party has ‘purchased’ the debt from the original lender.
The new ‘assignee’ takes over collection procedures of that debt going forward, which can sometimes result in a debt collection agency being used to recover the monies on behalf of the new owner of the debt.
There are two types of debt assignment:
- Equitable Assignment
- Legal 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 the original lender who borrowed money to you.
The Law of Property Act, 1925 states the criteria for both types of assignment.
The criteria for a Legal Assignment include:
- The Deed of Assignment must be made in writing
- A Notice of Assignment notification must be sent to you, as the borrower
- The assignment must be absolute
If you have unsecured debts such as credit cards, personal loans, or catalogue debts then a notice of assignment may be used by the original creditor.
Under an Equitable Assignment, only the amount owed is assigned, and not the original creditor’s rights and responsibilities. With Equitable Assignments, the purchasing party is unable to take enforcement action in their own right.
Legal Assignment gives the assignee transferred power to enforce the debt.
Why Do Creditors Sell Debts?
Most lenders borrow money based on risk projections and as such, an account that then falls into default becomes problematic for them to collect monies from and therefore it may be more commercially viable to pass it onto another firm who have a different business model, which allows them to purchase debts, and collect with their own techniques.
When you sign a credit agreement with a creditor, there will have been a clause within the small print of that agreement. The creditor will have stated that they are able to assign their rights to a third party.
However, just because a new company has taken on the debt, as per the terms of the notice of assignment, they are not allowed simply to bull you with letters, text messages, or phone calls. If you’re being threatened by any creditor, new or old, and have unaffordable debts – give us a call on 0141 221 0999 for free, confidential advice.
Notice of Assignment – What Happens Next?
As far as your credit report is concerned, the new company taking on the debt on behalf of the original creditor will notify the Credit Reference Agencies of any default once repayments have started.
At this stage, you’ll see a company name-change on your credit file in regard to the debt that is subject to the notice of assignment.
The previous company’s name should be removed from your credit file, and any default will now be associated with the new creditor.
Notice of Assignment – How Does It Affect You?
If you were previously having difficulty in repaying your debt before the notice of assignment was served, you may find that the new owner of the debt has more flexibility to freeze interest and charges, allowing you to pay off what is owed more quickly.
Having a debt assigned to a new company can become a benefit for you as agreeing a sustainable debt repayment plan is in their mutual interest as well as yours. If you were to keep up payments – further action can be often thwarted. You should always seek expert debt advice in Scotland, if you’re struggling with unaffordable debts.
Getting Help Understanding a Notice of Assignment
If you have received a notice of assignment and you’re struggling to understand how it affects you, contact Trust Deed Scotland® today on 0141 221 0999.
Our expert debt advisors are ready to give you confidential debt advice and help you understand what solutions are available for you and your debts.
Since 2009, we have advised thousands of people in Scotland on the advantages and disadvantages of the Scottish Trust Deed, Debt Arrangement Scheme and alternative solutions to people experiencing financial difficulties in Scotland.