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Debt Assignment: How They Work, Considerations and Benefits

Daniel Liberto is a journalist with over 10 years of experience working with publications such as the Financial Times, The Independent, and Investors Chronicle.

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Investopedia / Ryan Oakley

What Is Debt Assignment?

The term debt assignment refers to a transfer of debt, and all the associated rights and obligations, from a creditor to a third party. The assignment is a legal transfer to the other party, who then becomes the owner of the debt . In most cases, a debt assignment is issued to a debt collector who then assumes responsibility to collect the debt.

Key Takeaways

• Debt assignment is a transfer of debt, and all the associated rights and obligations, from a creditor to a third party (often a debt collector).
• The company assigning the debt may do so to improve its liquidity and/or to reduce its risk exposure.
• The debtor must be notified when a debt is assigned so they know who to make payments to and where to send them.
• Third-party debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA), a federal law overseen by the Federal Trade Commission (FTC).

How Debt Assignments Work

When a creditor lends an individual or business money, it does so with the confidence that the capital it lends out—as well as the interest payments charged for the privilege—is repaid in a timely fashion. The lender , or the extender of credit , will wait to recoup all the money owed according to the conditions and timeframe laid out in the contract.

In certain circumstances, the lender may decide it no longer wants to be responsible for servicing the loan and opt to sell the debt to a third party instead. Should that happen, a Notice of Assignment (NOA) is sent out to the debtor , the recipient of the loan, informing them that somebody else is now responsible for collecting any outstanding amount. This is referred to as a debt assignment.

The debtor must be notified when a debt is assigned to a third party so that they know who to make payments to and where to send them. If the debtor sends payments to the old creditor after the debt has been assigned, it is likely that the payments will not be accepted. This could cause the debtor to unintentionally default.

When a debtor receives such a notice, it's also generally a good idea for them to verify that the new creditor has recorded the correct total balance and monthly payment for the debt owed. In some cases, the new owner of the debt might even want to propose changes to the original terms of the loan. Should this path be pursued, the creditor is obligated to immediately notify the debtor and give them adequate time to respond.

The debtor still maintains the same legal rights and protections held with the original creditor after a debt assignment.

Special Considerations

Third-party debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA). The FDCPA, a federal law overseen by the Federal Trade Commission (FTC), restricts the means and methods by which third-party debt collectors can contact debtors, the time of day they can make contact, and the number of times they are allowed to call debtors.

If the FDCPA is violated, a debtor may be able to file suit against the debt collection company and the individual debt collector for damages and attorney fees within one year. The terms of the FDCPA are available for review on the FTC's website .

Benefits of Debt Assignment

There are several reasons why a creditor may decide to assign its debt to someone else. This option is often exercised to improve liquidity  and/or to reduce risk exposure. A lender may be urgently in need of a quick injection of capital. Alternatively, it might have accumulated lots of high-risk loans and be wary that many of them could default . In cases like these, creditors may be willing to get rid of them swiftly for pennies on the dollar if it means improving their financial outlook and appeasing worried investors. At other times, the creditor may decide the debt is too old to waste its resources on collections, or selling or assigning it to a third party to pick up the collection activity. In these instances, a company would not assign their debt to a third party.

Criticism of Debt Assignment

The process of assigning debt has drawn a fair bit of criticism, especially over the past few decades. Debt buyers have been accused of engaging in all kinds of unethical practices to get paid, including issuing threats and regularly harassing debtors. In some cases, they have also been charged with chasing up debts that have already been settled.

Federal Trade Commission. " Fair Debt Collection Practices Act ." Accessed June 29, 2021.

Federal Trade Commission. " Debt Collection FAQs ." Accessed June 29, 2021.

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Assignment Of Debt

Jump to section, what is an assignment of debt.

Assignment of debt is an agreement that transfer debt, rights, and obligations from a creditor to a third party. Assignment of debt agreements are commonly found when a creditor issues past due debt to a debt collection agency. The original lender will be relieved of all obligations and the agency will become the new owner of the debt. Debt assignment allows creditors to improve liquidity by reducing their financial risk. If a creditor has taken on a large amount of unsecured debt, an assignment of debt agreement is a quick way to transfer some of the unsecured loans to another party.

Common Sections in Assignments Of Debt

Below is a list of common sections included in Assignments Of Debt. These sections are linked to the below sample agreement for you to explore.

Assignment Of Debt Sample

Reference : Security Exchange Commission - Edgar Database, EX-10 19 ex107.htm ASSIGNMENT OF DEBT AND SECURITY , Viewed October 25, 2021, View Source on SEC .

Who Helps With Assignments Of Debt?

Lawyers with backgrounds working on assignments of debt work with clients to help. Do you need help with an assignment of debt?

Post a project  in ContractsCounsel's marketplace to get free bids from lawyers to draft, review, or negotiate assignments of debt. All lawyers are vetted by our team and peer reviewed by our customers for you to explore before hiring.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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Assigning debts and other contractual claims - not as easy as first thought

Harking back to law school, we had a thirst for new black letter law. Section 136 of the Law of the Property Act 1925 kindly obliged. This lays down the conditions which need to be satisfied for an effective legal assignment of a chose in action (such as a debt). We won’t bore you with the detail, but suffice to say that what’s important is that a legal assignment must be in writing and signed by the assignor, must be absolute (i.e. no conditions attached) and crucially that written notice of the assignment must be given to the debtor.

When assigning debts, it’s worth remembering that you can’t legally assign part of a debt – any attempt to do so will take effect as an equitable assignment. The main practical difference between a legal and an equitable assignment is that the assignor will need to be joined in any legal proceedings in relation to the assigned debt (e.g. an attempt to recover that part of the debt).

Recent cases which tell another story

Why bother telling you the above?  Aside from our delight in remembering the joys of debating the merits of legal and equitable assignments (ehem), it’s worth revisiting our textbooks in the context of three recent cases. Although at first blush the statutory conditions for a legal assignment seem quite straightforward, attempts to assign contractual claims such as debts continue to throw up legal disputes:

• In  Sumitomo Mitsui Banking Corp Europe Ltd v Euler Hermes Europe SA (NV) [2019] EWHC 2250 (Comm),  the High Court held that a performance bond issued under a construction contract was not effectively assigned despite the surety acknowledging a notice of assignment of the bond. Sadly, the notice of assignment failed to meet the requirements under the bond instrument that the assignee confirm its acceptance of a provision in the bond that required the employer to repay the surety in the event of an overpayment. This case highlights the importance of ensuring any purported assignment meets any conditions stipulated in the underlying documents.
• In  Promontoria (Henrico) Ltd v Melton [2019] EWHC 2243 (Ch) (26 June 2019) , the High Court held that an assignment of a facility agreement and legal charges was valid, even though the debt assigned had to be identified by considering external evidence. The deed of assignment in question listed the assets subject to assignment, but was illegible to the extent that the debtor’s name could not be deciphered. The court got comfortable that there had been an effective assignment, given the following factors: (i) the lender had notified the borrower of its intention to assign the loan to the assignee; (ii) following the assignment, the lender had made no demand for repayment; (iii) a manager of the assignee had given a statement that the loan had been assigned and the borrower had accepted in evidence that he was aware of the assignment. Fortunately for the assignee, a second notice of assignment - which was invalid because it contained an incorrect date of assignment - did not invalidate the earlier assignment, which was found to be effective. The court took a practical and commercial view of the circumstances, although we recommend ensuring that your assignment documents clearly reflect what the parties intend!
• Finally, in Nicoll v Promontoria (Ram 2) Ltd [2019] EWHC 2410 (Ch),  the High Court held that a notice of assignment of a debt given to a debtor was valid, even though the effective date of assignment stated in the notice could not be verified by the debtor. The case concerned a debt assigned by the Co-op Bank to Promontoria and a joint notice given by assignor and assignee to the debtor that the debt had been assigned “on and with effect from 29 July 2016”. A subsequent statutory demand served by Promontoria on the debtor for the outstanding sums was disputed on the basis that the notice of assignment was invalid because it contained an incorrect date of assignment. Whilst accepting that the documentation was incapable of verifying with certainty the date of assignment, the Court held that the joint notice clearly showed that both parties had agreed that an assignment had taken place and was valid. This decision suggests that mistakes as to the date of assignment in a notice of assignment may not necessarily be fatal, if it is otherwise clear that the debt has been assigned.

The conclusion from the above? Maybe it’s not quite as easy as first thought to get an assignment right. Make sure you follow all of the conditions for a legal assignment according to the underlying contract and ensure your assignment documentation is clear.

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• assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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English law assignments of part of a debt: Practical considerations

United Kingdom |  Publication |  December 2019

Enforcing partially assigned debts against the debtor

The increase of supply chain finance has driven an increased interest in parties considering the sale and purchase of parts of debts (as opposed to purchasing debts in their entirety).

While under English law part of a debt can be assigned, there is a general requirement that the relevant assignee joins the assignor to any proceedings against the debtor, which potentially impedes the assignee’s ability to enforce against the debtor efficiently.

This note considers whether this requirement may be dispensed with in certain circumstances.

Can you assign part of a debt?

Under English law, the beneficial ownership of part of a debt can be assigned, although the legal ownership cannot. 1  This means that an assignment of part of a debt will take effect as an equitable assignment instead of a legal assignment.

Joining the assignor to proceedings against the debtor

While both equitable and legal assignments are capable of removing the assigned asset from the insolvency estate of the assignor, failure to obtain a legal assignment and relying solely on an equitable assignment may require the assignee to join the relevant assignor as a party to any enforcement action against the debtor.

An assignee of part of a debt will want to be able to sue a debtor in its own name and, if it is required to join the assignor to proceedings against the debtor, this could add additional costs and delays if the assignor was unwilling to cooperate. 2

Kapoor v National Westminster Bank plc

English courts have, in recent years, been pragmatic in allowing an assignee of part of a debt to sue the debtor in its own name without the cooperation of the assignor.

In Charnesh Kapoor v National Westminster Bank plc, Kian Seng Tan 3 the court held that an equitable assignee of part of a debt is entitled in its own right and name to bring proceedings for the assigned debt. The equitable assignee will usually be required to join the assignor to the proceedings in order to ensure that the debtor is not exposed to double recovery, but the requirement is a procedural one that can be dispensed with by the court.

The reason for the requirement that an equitable assignee joins the assignor to proceedings against the debtor is not that the assignee has no right which it can assert independently, but that the debtor ought to be protected from the possibility of any further claim by the assignor who should therefore be bound by the judgment.

Application of Kapoor

It is a common feature of supply chain finance transactions that the assigned debt (or part of the debt) is supported by an independent payment undertaking. Such independent payment undertaking makes it clear that the debtor cannot raise defences and that it is required to pay the relevant debt (or part of a debt) without set-off or counterclaim. In respect of an assignee of part of an independent payment undertaking which is not disputed and has itself been equitably assigned to the assignee, we believe that there are good grounds that an English court would accept that the assignee is allowed to pursue an action directly against the debtor without needing the assignor to be joined, as this is likely to be a matter of procedure only, not substance.

This analysis is limited to English law and does not consider the laws of any other jurisdiction.

Notwithstanding the helpful clarifications summarised in Kapoor, as many receivables financing transactions involve a number of cross-border elements, assignees should continue to consider the effect of the laws (and, potentially court procedures) of any other relevant jurisdictions on the assignment of part of a debt even where the sale of such partial debt is completed under English law.

Legal title cannot be assigned in respect of part of a debt. A partial assignment would not satisfy the requirements for a legal assignment of section 136 of the Law of Property Act 1925.

If an assignor does not consent to being joined as a plaintiff in proceedings against the debtor it would be necessary to join the assignor as a co-defendant. However, where an assignor has gone into administration or liquidation, there may be a statutory prohibition on joining such assignor as a co-defendant (without the leave of the court or in certain circumstances the consent of the administrator).

[2011] EWCA Civ 1083

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What is an Assignment of Debt?

By Sej Lamba

Updated on 26 February 2024 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

When Could an Assignment of Debt Happen?

Key issues on assignment of debt, drafting the correct documentation, giving notice, key takeaways.

Debts are increasingly common in today’s financial climate, and unfortunately, many people struggle to repay what they owe. Debts owed can be sold to third parties and a lot of companies in the UK purchase debts. However, this can be complicated as specific legal formalities apply when assigning debts. This article will explain some of the critical issues around the assignment of debt. 

Debt collection can be a complex process. There are various reasons as to why debt is assigned. For example, a company owed debt may want to avoid putting in time and effort to chase it or want to take legal action to recover it. 

To picture a scenario, imagine this:

• Joe Bloggs gets a brand-new shiny credit card. Joe purchases lots of nice things for his family with the credit card. Usually, he can keep up with payments as he keeps track of them and earns enough to pay them back;
• suddenly, Joe has an injury and cannot work anymore. He has to give up his job and now can’t afford to pay the credit card company back;
• Joe ignores various letters chasing the debt and hopes the problem will disappear. Ultimately, after months, the credit card company gives up and sells Joe’s debt to a debt collection agency.  

So, in summary – after the debt sale, Joe now owes money to a different company. 

In practice, debt assignments can be complex, and the parties must follow the relevant legal rules and draft the correct documentation.

An assignment of debt essentially transfers the debt from one party (the assignor) to a third party (an assignee). 

In practice, this will mean the original debtor (e.g. Joe Bloggs) will now owe the debt to a new third-party creditor (e.g. the debt collection business). Therefore, in the scenario above, Joe must now repay the debt to the third-party debt collection business.

This process can be complex. There have been several legal cases in the courts where this process has given rise to disputes.

There are two different types of assignment of debt – a legal assignment of debt and an equitable assignment of debt. 

In simple terms:

• a legal assignment of debt will transfer the right for enforcement of the debt; and
• an equitable assignment of debt will transfer only the benefit of the debt without the right to enforce it. 

Let us explore each type below.

Legal Assignment of Debt 

If the assignment complies with specific legal requirements under the Law of Property Act 1925, it will be a ‘legal assignment’. This means that the assignee will be the new owner of the debt. 

A legal assignment requires various formalities to be effective. For example, it must:

• be in writing and signed by the assignor;
• the debtor must be given written notice of the assignment;
• be absolute with no conditions attached to it;
• relate to the whole of the debt and not just part of it; and
• not be a charge.

After the transfer of the debt, the assignor can sue the debtor in its own name. 

Equitable Assignment of Debt

It is also possible to have an equitable debt transfer – the requirements for this are much less strict. For example, this can be done informally by the assignor informing the assignee that the rights are transferred to them. 

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For an equitable assignment, giving notice is not essential, but still always highly advisable. 

Where an equitable assignment is made, the assignee won’t have the right to pursue court action for the debt. In this case, the assignee will have to join forces with the assignor to sue for the debt to sue for the debt. 

The debtor should receive notice of any debt transfer so they know to whom the money is owed. Following notice, the new debt owner can pursue the debt owed. 

A legal assignment is the best option for an assignee of debt – this will give them full rights to enforce the debt. 

Assignments of debts can be very complex. For a legal assignment of debt, you need to follow various formalities. Otherwise, it may be unenforceable and lead to disputes. If you need help executing a debt assignment correctly, you should seek legal advice from an experienced lawyer.

If you need help with an assignment of debt, LegalVision’s experienced business lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0808 196 8584 or visit our membership page .

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• How Does Debt Assignment Work?

Chloe Meltzer | December 07, 2023

Legal Expert Chloe Meltzer, MA

Chloe Meltzer is an experienced content writer specializing in legal content creation. She holds a degree in English Literature from Arizona State University, complemented by a Master’s in Marketing from California Polytechnic State University-San Luis Obispo.

Edited by Hannah Locklear

Editor at SoloSuit Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: What are your options when your debt has been assigned to a debt collector? Find out why a creditor might have assigned your debt and how to deal with it.

Debt assignment refers to a transfer of debt. This includes all of the associated rights and obligations, as it goes from a creditor to a third party. Debt assignment is essentially the legal transfer of debt to a debt collector (or debt collection agency). After this agency purchases the debt, they will have the responsibility to collect the debt, meaning you will pay your debt to them.

File a response with SoloSuit to win against debt collectors.

Find Out How Debt Assignment Works

When a creditor or lender no longer wants to be responsible for attempting to collect your debt, they will sell your debt to a third party. When this occurs, a Notice of Assignment (NOA) is sent out to you. This should inform you of who is responsible for collecting the rest of your loan or debt.

Legally you must be notified if your debt is assigned to someone new. This is to ensure that you know where to make payments to. If you are not aware of the new assignment, you may send payments to the wrong location which could force you into unintentional default.

Know How the FDCPA Protects You

Third-party debt collectors must act according to the Fair Debt Collection Practices Act (FDCPA). This federal law restricts the methods by which a debt collector can contact you, and attempt to collect debts. The FDCPA regulates the time of day or night a collector can make contact, how often they can call, as well as what they say and how they say it.

If you believe that a debt collector has violated the FDCPA, then you may be able to file a suit against that company. You may also be able to sue for damages or attorney fees.

Stand up to debt collection agencies with SoloSuit.

Learn Why a Creditor Assigns Debt

There are a few reasons why a creditor may assign your debt. Typically, the most common reason is to reduce their risk. By assigning and selling the debt it is no longer their liability. They can ensure they recoup some of their money, and appease investors as well.

Discover How Purchasing a Debt Differs from Debt Assignment

The purchase of debt occurs before assignment. Before the assignment of delinquent debt, a collection agency will be required to purchase it. This is often done at a far lower price, while they still attempt to recoup the entire debt. Because of this, it allows you to attempt to settle your debt for less.

Understand Why Debt Assignment Is Often Criticized

The process of assigning debt is often seen as unethical. With threats, harassment, and lies of all kinds, many debt buyers have been accused of violating the FDCPA. Because of this, debt assignment has seen a good amount of criticism. Some cases have even seen consumers charged with debts that have already been settled or paid .

Nevertheless, this shows how important it is to be on top of your debts. The number one choice you should make with any debt or debt assignment is to respond to all correspondence. This will ensure that you stay in compliance, and act when you need to.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance

How to Answer a Summons for debt collection in all 50 states

Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide

• Connecticut
• Massachusetts
• Mississippi
• New Hampshire
• North Carolina
• North Dakota
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• Vermont ; Vermont (Small Claims court)
• West Virginia

Guides on how to resolve debt with every debt collector

Are you being sued by a debt collector? We’re making guides on how to resolve debt with each one.

• 11 Charter Communications
• AAA Collections
• Aargon Agency Inc
• Absolute Resolutions Investments LLC
• ACEI Collections
• Account Services
• Accredited Collection Services
• Advanced Recovery Systems
• AFNI Collections
• Alco Capital Group LLC
• Aldous and Associates
• Alliance Collections
• Alliance One
• Alliant Capital Management
• Alpha Recovery Corp
• Alltran Financial
• Alltran Health
• Alorica Inc.
• Amcol Clmbia in Court
• American Coradius International
• American Profit Recovery
• American Recovery Service
• Americollect
• AmSher Collection Services
• Apelles LLC
• AR Resources
• ARC Collections
• ARM Solutions
• Arrow Financial Services
• ARS National Services
• ARSC Debt Collectors
• AscensionPoint Recovery Services
• Asset Acceptance LLC
• Asset Recovery Solutions
• Associated Credit Services
• Atlantic Credit and Finance
• Atradius Collections
• Automated Collection Services, Inc.
• Autovest LLC
• AWA Collections
• Balekian Hayes
• Bay Area Receivables
• BCA Financial Services
• BC Services
• Benuck and Rainey
• Berlin-Wheeler
• Bluebonnet Financial LLC
• Bonneville Collections
• Bull City Financial
• Bureaus Investment Group
• Caine and Weiner
• Capio Partners
• Capital Accounts
• Capital Collections
• Capital Management Services
• Carmel Financial/New Coast Direct
• Cavalry SPV I LLC
• CBCS Collections
• CBV Collections
• CCB Credit Services
• CCS Collections
• CCS Offices
• Central Mediation Services
• Central Portfolio Control
• Cerastes LLC
• Choice Recovery
• Choice Recovery Inc
• CKS Financial
• CKMS Financial
• Client Services
• CMRE Financial Services
• Coast Professional
• Comenity Bank Debt Collection
• Commonwealth Financial
• ConServe Debt Collection
• Consumer Collection Management
• Contract Callers Inc
• Convergent Healthcare Recoveries
• Convergent Outsourcing
• Couch Conville & Blitt
• Covington Credit
• Credco in Court
• Credence Resource Management
• Credit Bureau Systems
• Credit Control Corporation
• Credit Management Company
• Credit Management LP
• Credit Systems
• CTC Debt Collector
• CVCS Debt Collection
• Cypress Financial Recoveries
• D&A Services
• Daniels, Norelli, Cecere & Tavel P.C.
• DCM Services
• Debt Recovery Solutions
• Delanor Kemper & Associates
• Department Stores National Bank
• Direct Recovery Associates
• Discover Collections
• Diversified Adjustment
• Diversified Consultants
• Diversified Recovery Bureau
• DNF Associates, LLC
• Dynamic Collectors
• Eagle Accounts Group, Inc.
• Eastern Account System
• Ellington and Associates Collections
• Encore Capital Group
• Enerson Law
• Enerson Law LLC
• Enhanced Recovery Company
• ERC Collections
• ERSolutions
• Estate Information Services
• Equable Ascent Financial
• Everest Business Funding
• Executive Credit Management
• Faber and Brand
• Factual Data
• Falls Collection Service
• FCO Collections and Outsourcing
• FIA Card Services
• fin rec svc (Financial Recovery Services)
• First Federal Credit Credit Control
• First Financial Bank
• First Portfolio Ventures LLC
• First Progress
• FirstPoint Collection Resources
• Firstsource Advantage
• FMA Alliance
• Forster & Garbus
• Franklin Collection Services
• Freedom Plus
• Freshview Solutions
• Frontline Asset
• Frost Arnett
• Fulton Friedman & Gullace LLP
• Galaxy International Purchasing, LLC
• GC Debt Collection
• GC Services
• General Revenue Corporation
• GLA Collections
• Glass Mountain Capital
• Glasser and Glasser
• Global Credit Collection Corp
• Global Trust Management
• GMAC Financing
• Golden 1 Credit Union
• Grant and Weber
• Grant Mercantile Agency
• Gulf Coast Collection Bureau
• Halsted Financial Services
• Harris and Harris
• Harvard Collection
• Harvest Credit Management
• Helvey and Associates
• Hollis Cobb
• Holloway Moxley
• Hosto Buchan
• Howard Lee Schiff
• H&R Accounts
• Hudson & Keyse LLC?
• Hunter Warfield
• Impact Receivables Management
• Innovative Recovery
• Integras Capital Recovery LLC
• Javitch Block
• JHPDE Finance 1 LLC
• JP Receivables Management Partners
• Kenneth Eisen and Associates
• KeyBank student loans
• Kirschenbaum, Phillips & Levy P.C.
• KLS Financial Services
• Kramer & Frank
• Lakeside Collection
• Lending Club
• Lincoln and Morgan Kabbage
• Linebarger Goggan Blair & Sampson LLP
• Lockhart Collection Agency
• LJ Ross Associates
• LTD Collections
• Malcolm S. Gerald and Associates
• Malen & Associates
• Mandarich Law Group
• Mannbracken
• Marcam Associates
• MARS Inc. Collections
• MCA Management Company
• McCarthy, Burgess & Wolff
• Meade & Associates
• Mercantile Adjustment Bureau
• Merchants Credit Association
• MGM Collections
• Michael J Adams PC
• Midland Funding LLC
• Mid-South Adjustment
• Monarch Recovery
• Monterey Financial
• Moss Law Firm
• Mountain Land Collections
• MRS Associates
• MSW Capital LLC
• Mullooly, Jeffrey, Rooney & Flynn
• Nathan and Nathan PC
• National Collegiate Trust
• National Credit Adjusters
• National Credit Care
• National Credit Systems
• National Enterprise Systems
• National Recovery Agency
• National Recovery Solutions
• Nationwide Credit
• Nationwide Recovery Services
• Nationwide Recovery Systems
• NCO Financial Systems Incorporated
• North American Recovery
• Northland Group
• Northstar Capital Acquisition
• Northstar Location Services
• NRC Collection Agency
• Oliver Adjustment Company
• Oliphant Financial, LLC
• P&B Capital Group
• PCB Collections Agency
• Palisades Collection LLC
• Pallida LLC
• Paragon Contracting Services
• Paragon Revenue Group
• Payday Loan Debt Collectors
• Pendrick Capital Partners
• Penn Credit
• Perdue Brandon
• Persolve LLC
• Phillips & Cohen Associates
• Phoenix Financial Services
• Pioneer Credit Recovery
• PRA Group, Inc.
• Pressler, Felt & Warshaw LLP
• Prestige Services, Inc.
• Prince Parker and Associates
• Professional Finance Company
• Progressive Management Systems
• Provest Law
• Quaternary Collection Agency
• RAB Collection Agency
• Rash Curtis and Associates
• Radius Global SOL
• Radius Global Solutions
• Rawlings Company
• Razor Capital
• Real Time Resolutions
• Receivables Performance Management
• Regents and Associates
• Reliant Capital Solutions
• Resurgent Capital Services and LVNV Funding
• Revco Solutions
• Revenue Enterprises LLC
• Revenue Group
• RGS Financial, Inc.
• RMP LLC in Court
• RMP Services
• RS Clark and Associates
• RTR Financial Services
• Rubin & Rothman
• Salander Enterprises LLC
• Samara Portfolio Management
• SCA Collections
• Scott Parnell and Associates
• Second Round Collections
• Second Round Sub LLC
• Selip & Stylianou LLP
• Sequium Asset Solutions
• Sessoms and Rogers
• Sherman Acquisition
• Sherman Financial Group
• SIMM Associates
• Source Receivables Management
• Southern Management Systems
• Southwest Credit Group
• Spire Recovery Solutions
• SRS Company
• Stark Collection Agency
• State Collection Service
• Stenger and Stenger
• Stillman Law Office
• Summit Account Resolution
• Sunrise Credit Services
• Superlative RM Debt Collector
• Suttell and Hammer
• Synergetic Communication
• Synerprise Consulting
• The Law Office of Michael J Scott
• Trellis Company
• Troy Capital
• TRS Recovery Services
• Tulsa Teachers Credit Union
• UCB Collection
• Unifin Debt Collector
• Universal Credit Services
• US Bank Collections
• USAA collections
• USCB America
• Valentine and Kebartas
• Valley Servicing
• Vance & Huffman LLC
• Van Ru Credit Corporation
• Velo Law Office
• Velocity Investments
• Viking Client Services
• Wakefield and Associates
• Waypoint Resource Group
• Weinberg and Associates
• Weltman, Weinberg & Reis
• Westwood Funding
• Williams and Fudge
• Wilshire Consumer Credit
• Wolpoff & Abramson
• Worldwide Asset Purchasing
• www.AutomotiveCredit.com
• Zarzaur & Schwartz
• Zwicker & Associates

Resolve your debt with your creditor

Some creditors, banks, and lenders have an internal collections department. If they come after you for a debt, Solosuit can still help you respond and resolve the debt. Here’s a list of guides on how to resolve debt with different creditors.

• American Express ; American Express – Debt Collection
• Bank of America
• Best Buy Credit Card
• Capital One
• Credit One Bank
• Old Navy Credit Card
• PayPal Synchrony Card
• Regional Finance
• Retailers National Bank
• Reunion Student Loan Finance Corporation
• SYNCB/PPEXTR
• Synchrony Bank
• Synchrony Walmart Card
• Target National Bank
• Wells Fargo
• Can I Pay My Original Creditor Instead of a Debt Collection Agency?
• Can I Settle a Debt with the Original Creditor?

Settle your medical debt

Having a health challenge is stressful, but dealing medical debt on top of it is overwhelming. Here are some resources on how to manage medical debt.

• Am I Responsible for My Spouse's Medical Debt?
• Do I Need a Lawyer for Medical Bills?
• Do I Need a Lawyer to Fight Medical Bill Debt?
• Does Bankruptcy Clear Medical Debt?
• How Much Do Collection Agencies Pay for Medical Debt?
• How to Find Medical Debt Forgiveness Programs
• Is There a Statute of Limitations on Medical Bills?
• Medical Debt Statute of Limitations by State
• Summoned to Court for Medical Bills — What Do I Do?
• Summoned to Court for Medical Bills? What to Do Next

Guides on arbitration

If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.

• How Arbitration Works
• How to Find an Arbitration Clause in Your Credit Agreement
• How to Make a Motion to Compel Arbitration
• How to Make a Motion to Compel Arbitration in Florida
• How to Make a Motion to Compel Arbitration Without an Attorney
• How Credit Card Arbitration Works
• Sample Motion to Compel Arbitration

Stop calls from debt collectors

Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.

• 1-800-390-7584
• 800-289-8004
• 800-955-6600
• 877-366-0169
• 877-591-0747
• 800-278-2420
• 800-604-0064
• 800-846-6406
• 877-317-0948
• 888-899-4332
• 888-912-7925
• 202-367-9070
• 502-267-7522

Federal debt collection laws can protect you

Knowing your rights makes it easier to stand up for your rights. Below, we’ve compiled all our articles on federal debt collection laws that protect you from unfair practices.

• 15 USC 1692 Explained
• Does the Fair Credit Reporting Act Work in Florida?
• FDCPA Violations List
• How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)
• How to Make a Fair Debt Collection Practices Act Demand Letter
• How to Submit a Transunion Dispute
• How to Submit an Equifax Dispute
• How to Submit an Experian Dispute
• What Debt Collectors Cannot Do — FDCPA Explained
• What Does Account Information Disputed by Consumer Meets FCRA Requirements Mean?
• What does “meets FCRA requirements” mean?
• What does FCRA stand for?
• What is the Consumer Credit Protection Act

Get debt relief in your state

We’ve created a specialized guide on how to find debt relief in all 50 states, complete with steps to take to find relief, state-specific resources, and more.

Debt collection laws in all 50 states

Debt collection laws vary by state, so we have compiled a guide to each state’s debt collection laws to make it easier for you to stand up for your rights—no matter where you live.

• Debt Collection Laws in Alabama
• Debt Collection Laws in Alaska
• Debt Collection Laws in Arizona
• Debt Collection Laws in Arkansas
• Debt Collection Laws in California
• Debt Collection Laws in Colorado
• Debt Collection Laws in Connecticut
• Debt Collection Laws in Delaware
• Debt Collection Laws in Florida
• Debt Collection Laws in Georgia
• Debt Collection Laws in Hawaii
• Debt Collection Laws in Kansas
• Debt Collection Laws in Idaho
• Debt Collection Laws in Illinois
• Debt Collection Laws in Indiana
• Debt Collection Laws in Iowa
• Debt Collection Laws in Kentucky
• Debt Collection Laws in Louisiana
• Debt Collection Laws in Massachusetts
• Debt Collection Laws in Michigan
• Debt Collection Laws in Minnesota
• Debt Collection Laws in Mississippi
• Debt Collection Laws in Missouri
• Debt Collection Laws in Montana
• Debt Collection Laws in Nebraska
• Debt Collection Laws in Nevada
• Debt Collection Laws in New Hampshire
• Debt Collection Laws in New Jersey
• Debt Collection Laws in New Mexico
• Debt Collection Laws in New York
• Debt Collection Laws in North Carolina
• Debt Collection Laws in North Dakota
• Debt Collection Laws in Ohio
• Debt Collection Laws in Oklahoma
• Debt Collection Laws in Oregon
• Debt Collection Laws in Pennsylvania
• Debt Collection Laws in Rhode Island
• Debt Collection Laws in South Carolina
• Debt Collection Laws in South Dakota
• Debt Collection Laws in Tennessee
• Debt Collection Laws in Texas
• Debt Collection Laws in Vermont
• Debt Collection Laws in Virginia
• Debt Collection Laws in Washington
• Debt Collection Laws in West Virginia
• Debt Collection Laws in Wisconsin
• Debt Collection Laws in Wyoming

Statute of limitations on debt state guides

Like all debt collection laws, the statute of limitations on debt varies by state. So, we wrote a guide on each state’s statutes. Check it out below.

Statute of Limitations on Debt Collection by State (Best Guide)

• Statute of Limitations on Debt Collection in Alabama
• Statute of Limitations on Debt Collection in Alaska
• Statute of Limitations on Debt Collection in Arizona
• Statute of Limitations on Debt Collection in Arkansas
• Statute of Limitations on Debt Collection in California
• Statute of Limitations on Debt Collection in Connecticut
• Statute of Limitations on Debt Collection in Colorado
• Statute of Limitations on Debt Collection in Delaware
• Statute of Limitations on Debt Collection in Florida
• Statute of Limitations on Debt Collection in Georgia
• Statute of Limitations on Debt Collection in Hawaii
• Statute of Limitations on Debt Collection in Illinois
• Statute of Limitations on Debt Collection in Indiana
• Statute of Limitations on Debt Collection in Iowa
• Statute of Limitations on Debt Collection in Kansas
• Statute of Limitations on Debt Collection in Louisiana
• Statute of Limitations on Debt Collection in Maine
• Statute of Limitations on Debt Collection in Maryland
• Statute of Limitations on Debt Collection in Michigan
• Statute of Limitations on Debt Collection in Minnesota
• Statute of Limitations on Debt Collection in Mississippi
• Statute of Limitations on Debt Collection in Missouri
• Statute of Limitations on Debt Collection in Montana
• Statute of Limitations on Debt Collection in Nebraska
• Statute of Limitations on Debt Collection in Nevada
• Statute of Limitations on Debt Collection in New Hampshire
• Statute of Limitations on Debt Collection in New Jersey
• Statute of Limitations on Debt Collection in New Mexico
• Statute of Limitations on Debt Collection in New York
• Statute of Limitations on Debt Collection in North Carolina
• Statute of Limitations on Debt Collection in North Dakota
• Statute of Limitations on Debt Collection in Oklahoma
• Statute of Limitations on Debt Collection in Oregon
• Statute of Limitations on Debt Collection in Oregon (Complete Guide)
• Statute of Limitations on Debt Collection in Pennsylvania
• Statute of Limitations on Debt Collection in Rhode Island
• Statute of Limitations on Debt Collection in South Carolina
• Statute of Limitations on Debt Collection in South Dakota
• Statute of Limitations on Debt Collection in Tennessee
• Statute of Limitations on Debt Collection in Texas
• Statute of Limitations on Debt Collection in Utah
• Statute of Limitations on Debt Collection in Vermont
• Statute of Limitations on Debt Collection in Virginia
• Statute of Limitations on Debt Collection in Washington
• Statute of Limitations on Debt Collection in West Virginia
• Statute of Limitations on Debt Collection in Wisconsin
• Statute of Limitations on Debt Collection in Wyoming

Check the status of your court case

Don’t have time to go to your local courthouse to check the status of your case? We’ve created a guide on how to check the status of your case in every state, complete with online search tools and court directories.

• Alabama Court Case Search—Find Your Lawsuit
• Alaska Court Case Search — Find Your Lawsuit
• Arizona Court Case Search - Find Your Lawsuit
• Arkansas Court Case Search — Find Your Lawsuit
• California Court Case Search- Find Your Lawsuit
• Colorado Court Case Search — Find Your Lawsuit
• Connecticut Case Lookup — Find Your Court Case
• Delaware Court Case Search — Find Your Lawsuit
• Florida Court Case Search — Find Your Lawsuit
• Georgia Court Case Search — Find Your Lawsuit
• Hawaii Court Case Search — Find Your Lawsuit
• Idaho Court Case Search – Find Your Lawsuit
• Illinois Court Case Search — Find Your Lawsuit
• Indiana Court Case Search — Find Your Lawsuit
• Iowa Court Case Search — Find Your Lawsuit
• Kansas Court Case Search — Find Your Lawsuit
• Kentucky Court Case Search — Find Your Lawsuit
• Louisiana Court Case Search — Find Your Lawsuit
• Maine Court Case Search — Find Your Lawsuit
• Maryland Court Case Search — Find Your Lawsuit
• Massachusetts Court Case Search — Find Your Lawsuit
• Michigan Court Case Search — Find Your Lawsuit
• Minnesota Court Case Search — Find Your Lawsuit
• Mississippi Court Case Search — Find Your Lawsuit
• Missouri Court Case Search — Find Your Lawsuit
• Montana Court Case Search — Find Your Lawsuit
• Nebraska Court Case Search — Find Your Lawsuit
• Nevada Court Case Search — Find Your Lawsuit
• New Hampshire Court Case Search — Find Your Lawsuit
• New Jersey Court Case Search—Find Your Lawsuit
• New Mexico Court Case Search - Find Your Lawsuit
• New York Case Search — Find Your Lawsuit
• North Carolina Court Case Search — Find Your Lawsuit
• North Dakota Court Case Search �� Find Your Lawsuit
• Ohio Court Case Search — Find Your Lawsuit
• Oklahoma Court Case Search — Find Your Lawsuit
• Oregon Court Case Search — Find Your Lawsuit
• Pennsylvania Court Case Search — Find Your Lawsuit
• Rhode Island Court Case Search — Find Your Lawsuit
• South Carolina Court Case Search — Find Your Lawsuit
• South Dakota Court Case Search — Find Your Lawsuit
• Tennessee Court Case Search — Find Your Lawsuit
• Texas Court Case Search — Find Your Lawsuit
• Utah Court Case Search — Find Your Lawsuit
• Vermont Court Case Search — Find Your Lawsuit
• Virginia Court Case Search — Find Your Lawsuit
• Washington Court Case Search — Find Your Lawsuit
• West Virginia Court Case Search — Find Your Lawsuit
• Wisconsin Court Case Search — Find Your Lawsuit
• Wyoming Court Case Search — Find Your Lawsuit

How to stop wage garnishment in your state

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in all 50 states.

• Stop Wage Garnishment in Alabama
• Stop Wage Garnishment in Alaska
• Stop Wage Garnishment in Arizona
• Stop Wage Garnishment in Arkansas
• Stop Wage Garnishment in California
• Stop Wage Garnishment in Colorado
• Stop Wage Garnishment in Connecticut
• Stop Wage Garnishment in Delaware
• Stop Wage Garnishment in Florida
• Stop Wage Garnishment in Georgia
• Stop Wage Garnishment in Hawaii
• Stop Wage Garnishment in Idaho
• Stop Wage Garnishment in Illinois
• Stop Wage Garnishment in Indiana
• Stop Wage Garnishment in Iowa
• Stop Wage Garnishment in Kansas
• Stop Wage Garnishment in Kentucky
• Stop Wage Garnishment in Louisiana
• Stop Wage Garnishment in Maine
• Stop Wage Garnishment in Maryland
• Stop Wage Garnishment in Massachusetts
• Stop Wage Garnishment in Michigan
• Stop Wage Garnishment in Minnesota
• Stop Wage Garnishment in Mississippi
• Stop Wage Garnishment in Missouri
• Stop Wage Garnishment in Montana
• Stop Wage Garnishment in Nevada
• Stop Wage Garnishment in New Hampshire
• Stop Wage Garnishment in New Jersey
• Stop Wage Garnishment in New Mexico
• Stop Wage Garnishment in New York
• Stop Wage Garnishment in North Carolina
• Stop Wage Garnishment in North Dakota
• Stop Wage Garnishment in Ohio
• Stop Wage Garnishment in Oklahoma
• Stop Wage Garnishment in Oregon
• Stop Wage Garnishment in Pennsylvania
• Stop Wage Garnishment in Rhode Island
• Stop Wage Garnishment in South Carolina
• Stop Wage Garnishment in South Dakota
• Stop Wage Garnishment in Tennessee
• Stop Wage Garnishment In Texas
• Stop Wage Garnishment In Utah
• Stop Wage Garnishment in Vermont
• Stop Wage Garnishment in Virginia
• Stop Wage Garnishment in Washington
• Stop Wage Garnishment in West Virginia
• Stop Wage Garnishment in Wisconsin
• Stop Wage Garnishment in Wyoming

Other wage garnishment resources

• Bank Account Garnishment and Liens in Texas
• Can I Stop Wage Garnishment?
• Can My Wife's Bank Account Be Garnished for My Debt?
• Can Payday Loans Garnish Your Wages?
• Can pensions be garnished?
• Can Private Disability Payments Be Garnished?
• Can Social Security Disability Be Garnished?
• Can They Garnish Your Wages for Credit Card Debt?
• Can You Stop a Garnishment Once It Starts?
• Guide to Garnishment Limits by State
• How Can I Stop Wage Garnishments Immediately?
• How Long Before a Creditor Can Garnish Wages?
• How Long Does It Take to Get Garnished Wages Back?
• How to Fight a Wage Garnishment
• How to Prevent Wage Garnishment
• How to Stop a Garnishment
• How to Stop Social Security Wage Garnishment
• How to Stop Wage Garnishment — Everything You Need to Know
• New York Garnishment Laws – Overview
• Ohio Garnishment Laws — What They Say
• Wage Garnishment Lawyer
• What Is Wage Garnishment?

How to settle a debt in your state

Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created a guide on how to settle your debt in all 50 states. Find out how to settle in your state with a simple click and explore other debt settlement resources below.

• How to Settle a Debt in Alabama
• How to Settle a Debt in Alaska
• How to Settle a Debt in Arizona
• How to Settle a Debt in Arkansas
• How to Settle a Debt in California
• How to Settle a Debt in Colorado
• How to Settle a Debt in Delaware
• How to Settle a Debt in Florida
• How to Settle a Debt in Hawaii
• How to Settle a Debt in Idaho
• How to Settle a Debt in Illinois
• How to Settle a Debt in Indiana
• How to Settle a Debt in Iowa
• How to Settle a Debt in Kansas
• How to Settle a Debt in Kentucky
• How to Settle a Debt in Louisiana
• How to Settle a Debt in Maryland
• How to Settle a Debt in Massachusetts
• How to Settle a Debt in Michigan
• How to Settle a Debt in Minnesota
• How to Settle a Debt in Mississippi
• How to Settle a Debt in Missouri
• How to Settle a Debt in Montana
• How to Settle a Debt in Nebraska
• How to Settle a Debt in Nevada
• How to Settle a Debt in New Hampshire
• How to Settle a Debt in New Jersey
• How to Settle a Debt in New Mexico
• How to Settle a Debt in New York
• How to Settle a Debt in North Carolina
• How to Settle a Debt in North Dakota
• How to Settle a Debt in Ohio
• How to Settle a Debt in Oklahoma
• How to Settle a Debt in Oregon
• How to Settle a Debt in Pennsylvania
• How to Settle a Debt in South Carolina
• How to Settle a Debt in South Dakota
• How to Settle a Debt in Tennessee
• How to Settle a Debt in Texas
• How to Settle a Debt in Utah
• How to Settle a Debt in Vermont
• How to Settle a Debt in Virginia
• How to Settle a Debt in West Virginia
• How to Settle a Debt in Wisconsin
• How to Settle a Debt in Wyoming

How to settle with every debt collector

Not sure how to negotiate a debt settlement with a debt collector? We are creating guides to help you know how to start the settlement conversation and increase your chances of coming to an agreement with every debt collector.

• American Express
• Capitol One
• Cavalry SPV
• Midland Funding
• Moore Law Group
• Navy Federal
• NCB Management Services
• Portfolio Recovery

Other debt settlement resources

• Best Debt Settlement Companies
• Can I Settle a Debt After Being Served?
• Can I Still Settle a Debt After Being Served?
• Can You Settle a Warrant in Debt Before Court?
• Debt Management vs. Debt Settlement
• Debt Settlement Pros and Cons
• Debt Settlement Scam
• Do I Need to Hire a Debt Settlement Lawyer?
• Do You Need a Debt Settlement Attorney in Houston Texas?
• Do You Owe Taxes on Settled Debt?
• Here’s a Sample Letter to Collection Agencies to Settle Debt
• How Can I Settle My Credit Card Debt Before Going to Court?
• How Do I Know if a Debt Settlement Company Is Legitimate?
• How Long Does a Lawsuit Take to Settle?
• How Much Do Settlement Companies Charge?
• How I Settled My Credit Card Debt With Discover
• How to Make a Debt Settlement Agreement
• How to Make a Settlement Offer to Navient
• How to Negotiate a Debt Settlement with a Law Firm
• How to send Santander a settlement letter
• How to Settle Debt for Pennies on the Dollar
• How to Settle Debt in 3 Steps
• How to Settle Debt with a Reduced Lump Sum Payment
• How to Settle a Credit Card Debt Lawsuit — Ultimate Guide
• How to Settle Credit Card Debt When a Lawsuit Has Been Filed
• If You Are Using a Debt Relief Agency, Can You Settle Yourself with the Creditor?
• Largest Debt Settlement Companies
• Should I Settle a Collection or Pay in Full?
• Summary of the Equifax Data Breach Settlement
• The Advantages of Pre-Settlement Lawsuit Funding
• The FTC Regulates Debt Settlement Through the Telemarketing Sales Rule
• The Pros and Cons of Debt Settlement
• What Happens if I Reject a Settlement Offer?
• What Happens if You Don't Pay a Debt Settlement?
• What Happens When You Settle a Debt?
• What Is A Debt Settlement Agreement?
• What is Debt Settlement?
• What Percentage Should I Offer to Settle Debt?
• What to Ask for in a Settlement Agreement
• Who Qualifies for Debt Settlement?
• Will Collection Agencies Settle for Less?
• 5 Signs of a Debt Settlement Scam

Personal loan and debt relief reviews

We give a factual review of the following debt consolidation, debt settlement, and loan organizations and companies to help you make an informed decision before you take on a debt.

• Accredited Debt Relief Debt Settlement Reviews
• Advance America Loan Review
• ACE Cash Express Personal Loan Review
• BMG Money Loan Review
• BMO Harris Bank Review: Pros and Cons
• Brite Solutions Debt Settlement Reviews
• Caliber Home Loans Mortgage Review
• Cambridge Debt Consolidation Review
• Campus Debt Solutions Review
• CashNetUSA Review
• Century Debt Settlement Reviews
• ClearPoint Debt Management Review
• Click N Loan Reviews
• CuraDebt Debt Settlement Review
• CuraDebt Reviews: Debt Relief Assistance For California Residents
• Debt Eraser Review
• Debtconsolidation.com Debt Settlement Reviews
• Eagle One Debt Settlement Reviews
• Freedom Debt Relief Debt Settlement Reviews
• Global Holdings Debt Settlement Reviews
• Golden 1 Credit Union Personal Loan Review
• Honda Financial Services Review
• iLending Reviews
• Infinite Law Group Debt Settlement Reviews
• JG Wentworth Debt Settlement Reviews
• LoanMart Reviews
• Mastriani Law Firm Review
• Milestone ® Mastercard ® Review
• ModoLoan Review
• Money Management International Reviews
• M&T Mortgage Company Review
• National Debt Relief Debt Settlement Reviews
• New Era Debt Settlement Reviews
• OppLoans Review
• Pacific Debt Relief Reviews
• Palisade Legal Group Debt Settlement Reviews
• PCG Debt Consolidation Review
• PenFed Auto Loan Review
• Priority Plus Financial Reviews
• Roseland Associates Debt Consolidation Review
• SDCCU Debt Consolidation Review
• Speedy Cash Loans Review
• Symple Lending Reviews
• Tripoint Lending Reviews
• TurboDebt Debt Settlement Reviews
• Turnbull Law Group Debt Settlement Reviews
• United Debt Settlement Reviews
• Upgrade Auto Loans Reviews

How to repair and improve your credit score

Debt has a big impact on your credit. Below is a list of guides on how to repair and improve your credit, even while managing major debt.

• 3 Ways to Repair Your Credit with Debt Collections
• 5 Pros and Cons of Credit Cards & How to Use Them Wisely
• 6 Reasons Your Credit Score Isn't Going Up
• Bankruptcy vs Debt Settlement: Which is Better for Your Credit Score?
• Does Debt Consolidation Hurt Your Credit Score?
• Does Wage Garnishment Affect Credit?
• Guide to Disclosing Income on Your Credit Card Application
• How Long Does It Take to Improve My Credit Score After Debt Settlement?
• How Often Does Merrick Bank Increase Your Credit Limit?
• How to fix your credit to buy a house
• How to Handle Debt and Improve Credit
• How to Raise My Credit Score 40 Points Fast
• If I Settle with a Collection Agency, Will It Hurt My Credit?
• Is 600 a Good Credit Score?
• Obama Credit Card Debt Relief Program – How to Use It
• Sample credit report dispute letter
• Should I Use Credit Journey?
• Understanding myFICO: Your Gateway to Better Credit
• What Does "DLA" Mean on a Credit Report?
• What Is A Good Credit Score For Businesses?
• What is American Credit Acceptance?
• What is CBNA on my credit report?
• What is CreditFresh?
• Who Made the Credit Score?
• Why is THD/CBNA on my credit report?

How to resolve student loan debt

Struggling with student debt? SoloSuit’s got you covered. Below are resources on handling student loan debt.

• Budgeting Strategies for Students: How to Manage Your Finances Wisely
• Can You Go to Jail for Not Paying Student Loans?
• Can You Settle Student Loan Debt?
• Do Student Loans Go Away After 7 Years? (2022 Guide)
• Do You Need a Student Loan Lawyer? (Complete Guide)
• Does Student Debt Die With You?
• How to Manage a Student Debt
• How to Get Rid of Student Loan Debt
• Mandatory Forbearance Request Student Loan Debt Burden
• Negative Economic Effects of Student Loan Debt on the US Economy
• Pros and Cons of Taking a Student Loan
• Regional Adjustment Bureau Student Loans – How to Win
• The Real Impact of Student Debt: How Our Brains Handle It
• Why It's Important to Teach Students How to Manage Debt
• 5 Alternatives to Taking a Student Loan
• 5 Tips for Students: How to Create a Realistic and Effective Budget
• 7 College Financial Planning Tips for Students
• 7 Things to Consider When Taking a Student Loan
• 7 Tips to Manage Your Student Loans

Civil law legal definitions

You can represent yourself in court. Save yourself the time and cost of finding an attorney, and use the following resources to understand legal definitions better and how they may apply to your case.

• Accleration Clause — Definition
• Adjuster - Defined
• Adverse Action — Definition
• Affidavit — A Definition
• Annulment vs. divorce – what's the difference?
• Anticipatory Repudiation — Definition
• Bench Trial — Defined
• Certificate of Debt: A Definition
• Commuted Sentence – Definition
• Constructive Eviction - Defined
• Constructive Discharge - Definition
• Defendant - Definition and Everything You Need to Know
• Demurred – Definition
• Dischargeable - Definition
• Disclosures — Definition
• False Imprisonment Defined
• Good Faith Exception – Definition
• Hearsay — A Definition
• HOEPA – Definition
• Implied Contract – Definition
• Injunctive Relief — A Definition
• Intestate–Defined
• Irrevocable Agreement — Defined
• Joint Custody–Defined
• Litigator — A Definition
• Mediation - Definition
• Medical Malpractice — Definition
• Mistrial — A Definition
• Mitigating Circumstances — Definition
• Motion for Summary Judgment — Definition
• Nolle Prosequi – Definition
• Nunc Pro Tunc — A Definition
• Plaintiff - Definition and Everything You Need to Know
• Pro Se - Defined
• Probable Cause Hearing — Definition
• Restitution – Definition
• Sole Custody-Defined
• Statute of Limitations—Definition and Everything You Need to Know
• Summons—Definition
• Tenancy in Common – Defined
• Time Is of the Essence – Definition
• What Is the Bankruptcy Definition of Consumer Debt?
• Wrongful Termination–Defined

Get answers to these FAQs on debt collection

• Am I Responsible for My Husband's Debts If We Divorce?
• Am I Responsible for My Parent's Debt if I Have Power of Attorney?
• Can a Collection Agency Add Fees on the Debt?
• Can a Collection Agency Charge Interest on a Debt?
• Can a Credit Card Company Sue Me?
• Can a Debt Collector Freeze Your Bank Account?
• Can a Debt Collector Leave a Voicemail?
• Can a Debt Collector Take My Car in California?
• Can a Judgment Creditor Take my Car?
• Can a Process Server Leave a Summons Taped to My Door?
• Can an Eviction Be Reversed?
• Can Credit Card Companies Garnish Your Wages?
• Can Credit Cards Garnish Wages?
• Can Debt Collectors Call From Local Numbers?
• Can Debt Collectors Call You at Work in Texas?
• Can Debt Collectors Call Your Family?
• Can Debt Collectors Leave Voicemails?
• Can I Pay a Debt Before the Court Date?
• Can I Rent an Apartment if I Have Debt in Collection?
• Can I Sue the President for Emotional Distress?
• Can the SCRA Stop a Default Judgment?
• Can the Statute of Limitations be Extended?
• Can You Appeal a Default Judgement?
• Can You Get Unemployment if You Quit?
• Can You Go to Jail for a Payday Loan?
• Can You Go to Jail for Credit Card Debt?
• Can You Negotiate with Westlake Financial?
• Can You Record a Call with a Debt Collector in Your State?
• Can You Serve Someone with a Collections Lawsuit at Their Work?
• Can You Sue Someone Who Has Filed Chapter 7 Bankruptcy?
• Capital One is Suing Me – How Can I Win?
• Debt Snowball vs. Debt Avalanche: Which One Is Apt for You?
• Do 609 Letters Really Work?
• Do Debt Collectors Ever Give Up?
• Do I Have Too Much Debt to Divorce My Spouse?
• Do I Need a Debt Collection Defense Attorney?
• Do I Need a Debt Negotiator?
• Do I Need a Legal Coach?
• Do I Need a Payday Loans Lawyer?
• Does a Living Trust Protect Your Assets from Lawsuits?
• Does Chase Sue for Credit Card Debt?
• Does Debt Consolidation Have Risks?
• Does Midland Funding Show Up to Court?
• How Can I Get Financial Assistance in PA?
• How do Debt Relief Scams Work?
• How Do I Find Out If I Have Any Judgments Against Me?
• How Do I Get Rid of a Judgment Lien on My Property?
• How Do I Register on the Do Not Call List?
• How Does a Flex Loan Work?
• How Does Debt Affect Your Ability to Buy a Home?
• How Does Finwise Bank Work?
• How does Navy Credit debt forgiveness work?
• How Does Payments.tsico Work?
• How Important is it to Protect your Assets from Unexpected Events?
• How is Debt Divided in Divorce?
• How Long Do Creditors Have to Collect a Debt from an Estate?
• How long do debt collectors take to respond to debt validation letters?
• How Long Does a Judgement Last?
• How Long Does a Judgment Last?
• How Long Does a Levy Stay on a Bank Account?
• How Long Does an Eviction Stay on Your Record?
• How Many Calls from a Debt Collector is Considered Harassment?
• How Many Times Can a Judgment Be Renewed in North Carolina?
• How Many Times Can a Judgment be Renewed in Oklahoma?
• How Much Do Collection Agencies Pay for Debt?
• How Much Do You Have to Be in Debt to File Chapter 7?
• How Much Does College Actually Cost?
• How Often Do Credit Card Companies Sue for Non-Payment?
• How Should You Respond to the Theft of Your Identity?
• I am being sued because my identity was stolen - What do I do?
• If a Car is Repossessed Do I Still Owe the Debt?
• Is Debt Forgiveness Taxable?
• Is Freedom Debt Relief a Scam?
• Is it Legal for Debt Collectors to Call Family Members?
• Is it Smart to Consolidate Debt?
• Is LVNV Funding a Legitimate Company? - Them in Court
• Is My Case in the Right Venue?
• Is Portfolio Recovery Associates Legit? — How to Win
• Is Severance Pay Taxable?
• Is SoloSuit Worth It?
• Is Someone with Power of Attorney Responsible for Debt After Death?
• Is the NTB Credit Card Safe?
• Is There a Judgment Against Me Without my Knowledge?
• Is transworld systems legitimate? — How to win in court
• Liquidate–What Does it Mean?
• Litigation Finance: Is it a Good Investment?
• Received a 3-Day Eviction Notice? Here's What To Do
• Should I File Bankruptcy Before or After a Judgment?
• Should I Hire a Civil Litigation Attorney?
• Should I Hire a Civil Rights Lawyer?
• Should I Hire a Litigation Attorney?
• Should I Marry Someone With Debt?
• Should I Pay Off an Old Apartment Debt?
• Should I Send a Demand Letter Before a Lawsuit?
• Should I Use My IRA to Pay Off Credit Card Debt?
• Should You Communicate with a Debt Collector in Writing or by Telephone?
• Should You Invest in Stocks While In Debt?
• Subsidized vs. Unsubsidized Loans: Which is Better?
• The Truth: Should You Never Pay a Debt Collection Agency?
• What are the biggest debt collector companies in the US?
• What are the different types of debt?
• What Bank Is Behind Best Buy's Credit Card?
• What Bank Issues Kohl's Credit Card?
• What Bank Owns Old Navy Credit Card?
• What Credit Bureau does Aqua Finance Use?
• What Credit Bureau Does Truliant Use?
• What Does “Apple Pay Transaction Under Review” Mean?
• What Does a Debt Collector Have to Prove in Court?
• What Does BAC Stand For?
• What does HAFA stand for?
• What Does Payment Deferred Mean?
• What Does Reaffirmation of Debt Mean?
• What Happens After a Motion for Default Is Filed?
• What Happens at a Motion for Summary Judgment Hearing?
• What Happens If a Defendant Does Not Pay a Judgment?
• What Happens If a Process Server Can't Serve You?
• What Happens if a Tenant Wins an Eviction Lawsuit?
• What Happens If Someone Sues You and You Have No Money?
• What Happens If You Avoid Getting Served Court Papers?
• What Happens If You Don’t Pay Speedy Cash?
• What Happens If You Ignore a Debt Collector?
• What Happens If You Never Answer Debt Collectors?
• What Happens When a Debt Is Sold to a Collection Agency
• What Happens When a Debt Is Sold to a Collection Agency?
• What If a Summons Was Served to the Wrong Person?
• What If an Order for Default Was Entered?
• What if I default on an Avant payment?
• What If the Wrong Defendant Is Named in a Lawsuit?
• What Is a Case Number?
• What is a Certificate of Judgment in Ohio?
• What Is a Certificate of Service?
• What Is a Civil Chapter 61 Warrant?
• What is a Civil Litigation Lawyer?
• What Is a Consent Judgment?
• What Is a CPN Number?
• What Is a Debt Brokerage?
• What Is a Debt-to-Sales Ratio?
• What Is a Defamation Lawsuit?
• What is a default judgment?— What do I do?
• What Is a Libel Lawsuit?
• What is a Lien on a House?
• What is a Lien Release on a Car?
• What is a Lien?
• What Is a Motion to Strike?
• What Is a Motion to Suppress?
• What Is a Non-Dischargeable Debt in Tennessee?
• What Is a Nonsuit Without Prejudice?
• What Is a Preliminary Hearing?
• What Is a Reaffirmation Agreement?
• What Is a Request for Dismissal?
• What Is a Rule 3.740 Collections Defense in California?
• What Is a Slander Lawsuit?
• What is a Stipulated Judgment?
• What Is a Warrant in Debt?
• What is ABC Financial Club Charge?
• What is ACS Ed Services?
• What is Advanced Call Center Technologies?
• What is Alimony?
• What Is Allied Interstate's Phone Number?
• What is an Affirmative Defense?
• What Is an Assignment of Debt?
• What Is an Attorney Malpractice Lawsuit?
• What Is an Unlawful Detainer Lawsuit?
• What is Bank of America CashPro?
• What is Bitty Advance?
• What Is Celtic Bank?
• What is Consumer Portfolio Services?
• What Is Credence Resource Management?
• What Is Debt Internment?
• What Is Discover's 60/60 plan?
• What is Evading the Police?
• What Is Extinguishment of Debt?
• What is First Investors Financial Services?
• What is Global Lending Services?
• What is homicide?
• What Is Lexington Law Firm?
• What is LGFCU Personal Loan?
• What is Moral Turpitude?
• What is Online Information Services?
• What is Oportun?
• What Is Service of Process in Texas?
• What is sewer service?
• What Is Summary Judgment?
• What is Synchrony Bank's Hardship Program?
• What Is T-Mobile's Phone Number for Debt Collection?
• What Is the Amount of Money You Still Owe to Their Credit Card Company Called?
• What is the Deadline for a Defendant's Answer to Avoid a Default Judgment?
• What Is the Formula for Calculating Closing Costs?
• What Is the Minimum Amount That a Collection Agency Will Sue For?
• What Is the Phone Number for IQ Data?
• What is the Purpose of the Truth in the Lending Act?
• What is the status of my case?
• What Is the Statute of Limitations on Debt in Washington?
• What is the Telemarketing Sales Rule?
• What is Unsecured Credit Card Debt?
• What is WCTCB?
• What is WFDS?
• What is WUVISAAFT?
• What is Zombie Debt, and How Do I Deal With It?
• What Personal Property Can Be Seized in a Judgment?
• What Should I Do If Crown Asset Management Suing Me?
• What Should I Do If OneMain Financial Is Taking Me to Court?
• What Should You Do if You Can't Pay Your Mortgage?
• What states require a professional licensing number for debt collectors?
• When Does Exeter Finance Repo Cars?
• When Is My Rent Due Legally?
• Where’s My Amended Tax Return?
• Which Bank Does Macy's Credit Card Use?
• Who is EOSCCA?
• Who is Over the Loan Forgiveness Program at KHESLC?
• Who is Synchrony Bank? — Beat Them in Court
• Who is Jefferson Capital Systems LLC — How to win in court
• Why Being Judgment Proof Is Not a Defense to a Lawsuit
• Why Can't Lawyers Give Legal Advice?
• Who is Synchrony Bank? — Them in Court
• Why Do Debt Collectors Block Their Phone Numbers?
• Why Do Lawyers Charge So Much?
• Why Is the Sheriff Looking for Me?
• Why Would a Sheriff Come to My House with Papers?
• Will Bankruptcy Stop a Judgment?

How-to debt guides

• How to Beat Westlake Portfolio Management
• How to Access Free Debt Relief
• How to Answer a Lawsuit for Debt Collection
• How to Appear in Court by Phone
• How to Apply For Unemployment Benefits in Florida
• How to Avoid Getting Served
• How to Beat a Bill Collector in Court
• How to Beat a Debt Collector in Court
• How to Beat a Lawsuit From a Debt Collector
• How to Cancel a Merrick Bank Credit Card
• How to Cancel an American Eagle Credit Card: A Step-by-Step Guide
• How to Cancel JCPenney Credit Card
• How to Deal with Debt Collectors
• How to decide what to do next in a lawsuit
• How to Defend Yourself in Court
• How To Develop A Debt Repayment Plan That Works
• How to Discharge a Debt with UCC
• How to Dispute a Debt and Win
• How to Dispute a False Positive Drug Test
• How to dispute a rental collection
• How to Drag Out an Eviction
• How to Fight a Motion for Relief From Automatic Stay
• How to Fight an Eviction
• How to Fight Debt Collectors in Court and Win
• How to File a Civil Answer in Kings County Supreme Court
• How to File a Civil Answer With the Duval Clerk of Courts - Florida
• How to File a Motion to Extend Time
• How to File a Motion to Satisfy Judgment in Utah
• How to File a Motion to Set Aside Judgment
• How to File Chapter 13 Without an Attorney
• How to File in Bergen County Superior Court
• How to File in Deschutes County Circuit Court
• How to File in Josephine County Courthouse
• How to File in Miamisburg Municipal Court
• How to File in Monmouth County Courthouse
• How to File in Oak Grove Courthouse
• How to File in Oregon Small Claims Court
• How to File in Small Claims Court in Iowa
• How to File in the Houston County Superior Court
• How To Fill Out the PLD-C-001
• How to Find My Bridgecrest Login
• How to Find Out If You're Being Sued
• How to Find Out What Collection Agency Owns Your Debt
• How to Find the Attorney That is Suing You (Secret)
• How to get a case dismissed without prejudice on statute of limitations
• How to Get a Divorce in Florida
• How to Get Credit Card Debt Relief
• How to Get Debt Relief (Ultimate 50 State Guide 2023)
• How to Get Out of a Bridgecrest Loan
• How to get out of a RISE loan
• How to Get Out of Debt Before Retirement
• How to Get Out of Paying HOA Dues
• How to Get Relief From a Gambling Debt
• How to Hire a Mediator
• How to Identify Age Discrimination in the Employment Act
• How to identify fake and abusive debt collectors
• How to Liquidate Credit Cards Into Cash
• How to liquidate your assets to pay off debt
• How to Make a 609 Letter That Really Works
• How to Make a Debt Validation Letter - The Ultimate Guide (2023)
• How to Make a Motion to Dismiss
• How to Make a Motion to Lift Stay
• How to Make a Motion to Vacate Judgment
• How to Make a Will
• How to Make an Eviction Appeal
• How to Make Motion to Set Aside — Ultimate Guide
• How to Negotiate a Lien on a House
• How to Negotiate Credit Card Debts
• How to Paramount Recovery
• How To Pay for College and Avoid Debt
• How to Pay off Your Destiny Credit Card
• How to Perform Voluntary Repossession
• How to Protect Your LLC with a Registered Agent Service
• How to Recover from a Negative Bank Balance
• How to Report the Cancellation of a Debt on a 1040
• How to Respond to a Debt Collection Summons in Wyoming
• How to Respond to a Debt Lawsuit vs United Collection Bureau
• How to Respond to a Lawsuit Against Northstar Location Services
• How to Respond to a Sheriff's Note On Your Door
• How to respond to a Summons from VanSlam, Inc
• How to Respond to Plaintiff's Counsel
• How To Respond to Request for Admission
• How to Satisfy a Judgment
• How to Spot Common IRS Scams
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Assignment is a legal term whereby an individual, the “assignor,” transfers rights, property, or other benefits to another known as the “ assignee .”   This concept is used in both contract and property law.  The term can refer to either the act of transfer or the rights /property/benefits being transferred.

Contract Law   

Under contract law, assignment of a contract is both: (1) an assignment of rights; and (2) a delegation of duties , in the absence of evidence otherwise.  For example, if A contracts with B to teach B guitar for $50, A can assign this contract to C.  That is, this assignment is both: (1) an assignment of A’s rights under the contract to the $50; and (2) a delegation of A’s duty to teach guitar to C.  In this example, A is both the “assignor” and the “delegee” who d elegates the duties to another (C), C is known as the “ obligor ” who must perform the obligations to the assignee , and B is the “ assignee ” who is owed duties and is liable to the “ obligor ”.

(1) Assignment of Rights/Duties Under Contract Law

There are a few notable rules regarding assignments under contract law.  First, if an individual has not yet secured the contract to perform duties to another, he/she cannot assign his/her future right to an assignee .  That is, if A has not yet contracted with B to teach B guitar, A cannot assign his/her rights to C.  Second, rights cannot be assigned when they materially change the obligor ’s duty and rights.  Third, the obligor can sue the assignee directly if the assignee does not pay him/her.  Following the previous example, this means that C ( obligor ) can sue B ( assignee ) if C teaches guitar to B, but B does not pay C $50 in return.

            (2) Delegation of Duties

If the promised performance requires a rare genius or skill, then the delegee cannot delegate it to the obligor.  It can only be delegated if the promised performance is more commonplace.  Further, an obligee can sue if the assignee does not perform.  However, the delegee is secondarily liable unless there has been an express release of the delegee.  That is, if B does want C to teach guitar but C refuses to, then B can sue C.  If C still refuses to perform, then B can compel A to fulfill the duties under secondary liability.

Lastly, a related concept is novation , which is when a new obligor substitutes and releases an old obligor.  If novation occurs, then the original obligor’s duties are wiped out. However, novation requires an original obligee’s consent .  

Property Law

Under property law, assignment typically arises in landlord-tenant situations.  For example, A might be renting from landlord B but wants to another party (C) to take over the property.   In this scenario, A might be able to choose between assigning and subleasing the property to C.  If assigning , A would be giving C the entire balance of the term, with no reversion to anyone whereas if subleasing , A would be giving C for a limited period of the remaining term.  Significantly, under assignment C would have privity of estate with the landlord while under a sublease, C would not. 

[Last updated in May of 2020 by the Wex Definitions Team ]

• business law
• landlord & tenant
• property & real estate law
• trusts, inheritances & estates
• wex definitions

Equitable Assignment: Everything You Need to Know

An equitable assignment is one that does not fulfill the statutory criteria for a legal assignment, but is binding and upheld by the courts in the interest of equability, justice, and fairness. 3 min read updated on February 01, 2023

An equitable assignment is one that does not fulfill the statutory criteria for a legal assignment, but is binding and upheld by the courts in the interest of equability, justice, and fairness.

Equitable Assignment

An equitable assignment may not appear to be self-evident by the law's standard, but it presents the assignee with a title that is protected and recognized in equity. It's based on the essence of a declaration of trust; specifically, essential fairness and natural justice. As long as there is valuable consideration involved, it does not matter if a formal agreement is signed. There needs to be some sort of intent displayed from one party to assign and the other party to receive.

The evaluation of a righteous equitable assignment is completed by determining if a debtor would rationally pay the debt to another party alleging to be the assignee. Equitable assignments can be created by:

• The assignor informing the assignee that they transferred a right to them
• The assignor instructing the other party to release their obligation from the assignee and place it instead on the assignor

The only part of an agreement that can be assigned is the benefit. Generally speaking, there is no prerequisite for the written notice to be received or given. The significant characteristic that separates an equitable assignment from a legal assignment is that most of the time, an equitable assignee may not take action against a third party. Instead, it must rely on the guidelines governing equitable assignments. In other words, the equitable assignee must team up with the assignor to take action.

The Doctrine of Equitable Assignment in Wisconsin

In Dow Family LLC v. PHH Mortgage Corp ., the Wisconsin Supreme Court issued in favor of the doctrine of equitable assignment. The case was similar to many other foreclosure cases, except this one came with a twist. Essentially, Dow Family LLC purchased a property and the property owner insisted the mortgage on the property had been paid off. However, in actuality, it wasn't. 

Prior to the sale, the mortgage on the property was with PHH Mortgage Corp. When PHH went to foreclose on the mortgage, Dow Family LLC contested it. There was one specific rebuttal that caught the attention of the Wisconsin Supreme Court. The official mortgage on record was with MERS, an appointee for the original lender, U.S. Bank.

Dow argued that PHH couldn't foreclose on the property because the true owner was MERS. Essentially, Dow was stating that the mortgage was never assigned to PHH. Based on this argument, PHH utilized the doctrine of equitable assignment.

Based on a case from 1859, Croft v. Bunster, the court determined that the security for a note is equitably assigned when the note is assigned without a need for an independent, written assignment. Additionally, Dow contended that the statute of frauds prohibits the utilization of the doctrine, mainly because it claimed every assignment on a property must be formally recorded.

During the case, Dow argued that the MERS system, which stored the data regarding the mortgage, was fundamentally flawed. According to the court, the statute of frauds was satisfied because the equitable assignment was in accordance with the operation of law. Most importantly, the court avoided all consideration regarding the MERS system, concluding it was not significant in their decision. 

The outcome was a major win for lenders, as they were relying on the doctrine specifically for these types of circumstances.

Most experts agree that this outcome makes sense in the current mortgage-lending environment. This is due to the fact that it is still quite common for mortgages to be bundled up into mortgage-backed securities and sold on the secondary market.

Many economists claim that by not requiring mortgages to be recorded each time a transfer is completed, the loans are more easily marketed to investors. Additionally, debtors know who their current mortgage company is because the new lender must always notify the current borrower in order to receive payment. It was determined that recording and documenting the mortgage merely provides a signal to the rest of the world that the property owner secures a debt.

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Content Approved by UpCounsel

• Assignment Legal Definition
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• Legal Assignment
• Assignment and Novation Agreement: What You Need to Know
• Assignment of Rights Example
• Assignment of Rights and Obligations Under a Contract
• Partial Assignment of Contract
• Assignment Contract Law
• What is an Assignment and Assumption Agreement

Assignment Involves Transfer of Rights to Collect Outstanding Debts

Is a creditor allowed to sell a debt to someone else for collection, the law allows a creditor to whom a debtor owes money to transfer the right to collect the outstanding monies to another person who then becomes the assignee creditor., understanding what constitutes as a legally binding assignment of creditor rights to collect a debt.

Right to Collect on Debts

In Ontario, the Court of Appeal case of Clark v. Werden , 2011 ONCA 619 confirmed the right to assign debts per the Conveyancing and Law of Property Act , R.S.O. 1990, c. C.34 , whereas such statute prescribes the conditions and requirements for the transfer of rights involving monies, among other things, whereas it was said:

Clark v. Werden , 2011 ONCA 619 at paragraph 13

[13]   The ability to assign a debt or legal chose in action is codified in s. 53 of the  Conveyancing and Law of Property Act , which provides that a debt is assignable subject to the equities between the original debtor and creditor and reads as follows:

53 (1) Any absolute assignment made on or after the 31st day of December, 1897, by writing under the hand of the assignor, not purporting to be by way of charge only, of any debt or other legal chose in action of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action is effectual in law, subject to all equities that would have been entitled to priority over the right of the assignee if this section had not been enacted, to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor.

Partially Assigned

Interestingly, it should be noted that the statute law refers to an " absolute assignment "; however, such reference is made without fully defining the rights and duties of creditors and assignees in regards to concerns for the partial assignment of a debt.  However, in such circumstances as where a partial assignment of debt occurs, and therefore where there is more one assignee who assumes various rights of the original creditor, the assignee must include all assignees, or the original creditor if the original creditor retained a portion of the debt, when legal action is brought against debtor.  This requirement was stated by the Court of Appeal within the case of DiGuilo v. Boland , 1958 CanLII 92 wherein it was stated:

DiGuilo v. Boland , 1958 CanLII 92

The main reason why an assignee of a part of a debt is required to join all parties interested in the debt in an action to recover the part assigned to him is in my opinion because the Court cannot adjudicate completely and finally without having such parties before it.  The absence of such parties might result in the debtor being subjected to future actions in respect of the same debt, and moreover might result in conflicting decisions being arrived at concerning such debt.

Failed Notice

Of potentially grave concern to creditors, and potentially with great relief to debtors, for an assignee to retain the right to pursue the debtor, express written notice of the assignment is required.  This requirement was stated in 1124980 Ontario Inc. v. Liberty Mutual Insurance Company and Inco Ltd. , 2003 CanLII 45266  as part of the four part test to establish the right to pursue an assigned debt:

1124980 Ontario Inc.  v. Liberty Mutual , 2003 CanLII 45266 at paragraph 44

[44]   Accordingly, for there to be a valid legal assignment under  section 53(1) of the  CLPA , four requirements must be met:

a)  there must be debt or chose in action;

b)  the assignment must be absolute;

c)  the assignment must be written; and

d)  written notice of the assignment must be given to the debtor.

Where there is a failure of notice, and therefore failure to comply with the Conveyancing and Law of Property Act , it is said that the right to assign fails in law; however, relief in equity, via an equitable assignment may be available to an assignee affected by failure of notice.  Generally, in equity, when failure of notice occurs, the assignee is unable, in law, to bring an action in the name of the assignee and may do so only in the name of the creditor; however, even in the absence of proper notice as results in failure of assignment in law, and failure ot enjoin the creditor in an action pursued as an equitable assignment, the court may remain prepared to waive such a requirement whereas such occurred in the matter of  Landmark Vehicle Leasing Corporation v. Mister Twister Inc. , 2015 ONCA 545 wherein it was stated:

Landmark v. Mister Twister , 2015 ONCA 545 at paragraphs 10 to 16

[10]    Section 53(1) requires “ express notice in writing ” to the debtor.  Although there is some ambiguity in her reasons, it would appear that the trial judge found that Mr.  Blazys had express notice of the assignment, but not notice in writing.  Ross Wemp Leasing therefore did not assign the leases to Landmark in law: see  80 Mornelle Properties Inc.  v. Malla Properties Ltd. , 2010 ONCA 850 (CanLII) , 327 D.L.R.  (4th) 361, at para.  22 .  Ross Wemp Leasing did, however, assign the leases to Landmark in equity.  An equitable assignment does not require any notice, let alone written notice:  Bercovitz Estate v. Avigdor , [1961] O.J.  No.  20 (C.A.), at paras.  16, 25.

[11]   The appellants, relying on  DiGuilo v. Boland , 1958 CanLII 92 (ON CA), [1958] O.R.  384 (C.A.), aff’d, [1961] S.C.C.A.  vii, argue that as the appellants did not have written notice of the assignment, Landmark could not sue on its own.  Instead, Landmark had to join Ross Wemp Leasing in the action.  The appellants argue that the failure to join Ross Wemp Leasing requires that the judgment below be set aside.

[12]    DiGuilo does in fact require that the assignor of a chose in action be joined in the assignee’s claim against the debtor when the debtor has not received written notice of the assignment.  The holding in DiGuilo tracks rule 5.03(3) of the  Rules of Civil Procedure , R.R.O.  1990, Reg.  194 : In a proceeding by the assignee of a debt or other chose in action, the assignor shall be joined as a party unless,

(a) the assignment is absolute and not by way of charge only; and

(b) notice in writing has been given to the person liable in respect of the debt or chose in action that it has been assigned to the assignee.  [Emphasis added.]

[13]   Yet the assignee’s failure to join the assignor does not affect the validity of the assignment or necessarily vitiate a judgment obtained by the assignee against the debtor.  Rule 5.03(6) reads:

The court may by order relieve against the requirement of joinder under this rule.

[14]   The joinder requirement is intended to guard the debtor against a possible second action by the assignor and to permit the debtor to pursue any remedies it may have against the assignor without initiating another action:  DiGuilo , at p.  395.  Where the assignee’s failure to join the assignor does not prejudice the debtor, the court may grant the relief in rule 5.03(6) : see  Gentra Canada Investments Inc.  v. Lipson , 2011 ONCA 331 (CanLII), 106 O.R.  (3d) 261, at paras.  59 - 65 , leave to appeal refused, [2011] S.C.C.A.  No.  327.

[15]   In this case, the trial judge found that Mr.  Blazys, and effectively all of the appellants, gained actual notice of the lease assignments very shortly after the assignments were made and well before Landmark sued.  Armed with actual, albeit not written, notice of the assignment, the appellants could fully protect themselves against any prejudice from Landmark’s failure to join Ross Wemp Leasing.  Had the appellants seen any advantage in joining Ross Wemp Leasing, either to defend against Landmark’s claim or to advance a claim against Ross Wemp Leasing, the appellants could have moved for joinder under rule 5.03(4).  The appellants’ failure to bring a motion to add Ross Wemp Leasing speaks loudly to the absence of any prejudice caused by Landmark’s failure to join the assignor.

[16]   Ross Wemp Leasing perhaps should have been a party to the proceeding.  Landmark’s failure to join Ross Wemp Leasing, however, did not prejudice the appellants and should have had no impact on the trial judgment.  If requested, this court will make a  nunc pro tunc order relieving Landmark from the requirement of joining Ross Wemp Leasing in the action.

Summary Comment

The rights to collect on a debt can be sold and transferred from the original creditor to a substitute creditor or assignee who then takes on the rights of the original creditor.  Indeed, the selling and buying of individual debts, or debts within an entire portfolio debts is common within business.  The entire collection services industry is based on the concept of buying outstanding debt and then standing in the shoes of the original creditor and pursuing the payment of the debt.  Other forms of buying and selling debt includes mortgage swaps, among other things.

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Assignment Involves Transfer of Rights to Collect Outstanding Debts

If a person is owed money can that person sell that debt to another person, debt can be bought and sold or otherwise transferred from a creditor who is owed money to another person who then becomes the assignee creditor with the right to collect the outstanding debt., understanding what constitutes as a legally binding assignment of creditor rights to collect a debt.

Right to Collect on Debts

In Ontario, the Court of Appeal case of Clark v. Werden , 2011 ONCA 619 confirmed the right to assign debts per the Conveyancing and Law of Property Act , R.S.O. 1990, c. C.34 , whereas such statute prescribes the conditions and requirements for the transfer of rights involving monies, among other things, whereas it was said:

Clark v. Werden , 2011 ONCA 619 at paragraph 13

[13]   The ability to assign a debt or legal chose in action is codified in s. 53 of the  Conveyancing and Law of Property Act , which provides that a debt is assignable subject to the equities between the original debtor and creditor and reads as follows:

53 (1) Any absolute assignment made on or after the 31st day of December, 1897, by writing under the hand of the assignor, not purporting to be by way of charge only, of any debt or other legal chose in action of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action is effectual in law, subject to all equities that would have been entitled to priority over the right of the assignee if this section had not been enacted, to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor.

Partially Assigned

It is notable that the statute makes mention of " absolute assignment " without clearly addressing the rights and method of treatment for a partial assignment of a debt.  In this circumstance, where more than one assignee may obtain or assume the rights of the creditor (or earlier assignee), a partial assignee is required to join all assignees when bringing legal action against the debtor.  This view was stated by the Court of Appeal in  DiGuilo v. Boland , 1958 CanLII 92 where it was said:

DiGuilo v. Boland , 1958 CanLII 92

The main reason why an assignee of a part of a debt is required to join all parties interested in the debt in an action to recover the part assigned to him is in my opinion because the Court cannot adjudicate completely and finally without having such parties before it.  The absence of such parties might result in the debtor being subjected to future actions in respect of the same debt, and moreover might result in conflicting decisions being arrived at concerning such debt.

Failed Notice

Of potentially grave concern to creditors, and potentially with great relief to debtors, for an assignee to retain the right to pursue the debtor, express written notice of the assignment is required.  This requirement was stated in 1124980 Ontario Inc. v. Liberty Mutual Insurance Company and Inco Ltd. , 2003 CanLII 45266  as part of the four part test to establish the right to pursue an assigned debt:

1124980 Ontario Inc.  v. Liberty Mutual , 2003 CanLII 45266 at paragraph 44

[44]   Accordingly, for there to be a valid legal assignment under  section 53(1) of the  CLPA , four requirements must be met:

a)  there must be debt or chose in action;

b)  the assignment must be absolute;

c)  the assignment must be written; and

d)  written notice of the assignment must be given to the debtor.

Where there is a failure of notice, and therefore failure to comply with the Conveyancing and Law of Property Act , it is said that the right to assign fails in law; however, relief in equity, via an equitable assignment may be available to an assignee affected by failure of notice.  Generally, in equity, when failure of notice occurs, the assignee is unable, in law, to bring an action in the name of the assignee and may do so only in the name of the creditor; however, even in the absence of proper notice as results in failure of assignment in law, and failure ot enjoin the creditor in an action pursued as an equitable assignment, the court may remain prepared to waive such a requirement whereas such occurred in the matter of  Landmark Vehicle Leasing Corporation v. Mister Twister Inc. , 2015 ONCA 545 wherein it was stated:

Landmark v. Mister Twister , 2015 ONCA 545 at paragraphs 10 to 16

[10]    Section 53(1) requires “ express notice in writing ” to the debtor.  Although there is some ambiguity in her reasons, it would appear that the trial judge found that Mr.  Blazys had express notice of the assignment, but not notice in writing.  Ross Wemp Leasing therefore did not assign the leases to Landmark in law: see  80 Mornelle Properties Inc.  v. Malla Properties Ltd. , 2010 ONCA 850 (CanLII) , 327 D.L.R.  (4th) 361, at para.  22 .  Ross Wemp Leasing did, however, assign the leases to Landmark in equity.  An equitable assignment does not require any notice, let alone written notice:  Bercovitz Estate v. Avigdor , [1961] O.J.  No.  20 (C.A.), at paras.  16, 25.

[11]   The appellants, relying on  DiGuilo v. Boland , 1958 CanLII 92 (ON CA), [1958] O.R.  384 (C.A.), aff’d, [1961] S.C.C.A.  vii, argue that as the appellants did not have written notice of the assignment, Landmark could not sue on its own.  Instead, Landmark had to join Ross Wemp Leasing in the action.  The appellants argue that the failure to join Ross Wemp Leasing requires that the judgment below be set aside.

[12]    DiGuilo does in fact require that the assignor of a chose in action be joined in the assignee’s claim against the debtor when the debtor has not received written notice of the assignment.  The holding in DiGuilo tracks rule 5.03(3) of the  Rules of Civil Procedure , R.R.O.  1990, Reg.  194 : In a proceeding by the assignee of a debt or other chose in action, the assignor shall be joined as a party unless,

(a) the assignment is absolute and not by way of charge only; and

(b) notice in writing has been given to the person liable in respect of the debt or chose in action that it has been assigned to the assignee.  [Emphasis added.]

[13]   Yet the assignee’s failure to join the assignor does not affect the validity of the assignment or necessarily vitiate a judgment obtained by the assignee against the debtor.  Rule 5.03(6) reads:

The court may by order relieve against the requirement of joinder under this rule.

[14]   The joinder requirement is intended to guard the debtor against a possible second action by the assignor and to permit the debtor to pursue any remedies it may have against the assignor without initiating another action:  DiGuilo , at p.  395.  Where the assignee’s failure to join the assignor does not prejudice the debtor, the court may grant the relief in rule 5.03(6) : see  Gentra Canada Investments Inc.  v. Lipson , 2011 ONCA 331 (CanLII), 106 O.R.  (3d) 261, at paras.  59 - 65 , leave to appeal refused, [2011] S.C.C.A.  No.  327.

[15]   In this case, the trial judge found that Mr.  Blazys, and effectively all of the appellants, gained actual notice of the lease assignments very shortly after the assignments were made and well before Landmark sued.  Armed with actual, albeit not written, notice of the assignment, the appellants could fully protect themselves against any prejudice from Landmark’s failure to join Ross Wemp Leasing.  Had the appellants seen any advantage in joining Ross Wemp Leasing, either to defend against Landmark’s claim or to advance a claim against Ross Wemp Leasing, the appellants could have moved for joinder under rule 5.03(4).  The appellants’ failure to bring a motion to add Ross Wemp Leasing speaks loudly to the absence of any prejudice caused by Landmark’s failure to join the assignor.

[16]   Ross Wemp Leasing perhaps should have been a party to the proceeding.  Landmark’s failure to join Ross Wemp Leasing, however, did not prejudice the appellants and should have had no impact on the trial judgment.  If requested, this court will make a  nunc pro tunc order relieving Landmark from the requirement of joining Ross Wemp Leasing in the action.

Summary Comment

The rights to collect on a debt can be sold and transferred from the original creditor to a substitute creditor or assignee who then takes on the rights of the original creditor.  Indeed, the selling and buying of individual debts, or debts within an entire portfolio debts is common within business.  The entire collection services industry is based on the concept of buying outstanding debt and then standing in the shoes of the original creditor and pursuing the payment of the debt.  Other forms of buying and selling debt includes mortgage swaps, among other things.

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In the complex financial landscape of the United Kingdom, understanding the nuances of ‘Assignment of Debt’ is essential for both creditors and debtors. This concept, often encountered but not always fully understood, involves the transfer of a debt obligation from the original creditor (the assignor) to a third party (the assignee).

This article aims to demystify the intricacies of debt assignment, explaining its types, legal implications, and impact on individuals’ financial standings.

Whether it’s about navigating through the differences between legal and equitable assignments, understanding the role of deeds, or grasping how such transactions affect your credit report and legal rights, this guide provides a comprehensive overview, ensuring that you are well informed about this critical aspect of financial management in the UK.

Table of Contents

What Does ‘Assignment of Debt’ Mean?

Assignment of Debt: a term that might sound complex, but it’s really quite straightforward. Let’s dive into what this means for you.

Simply put, your original creditor, known as the assignor, transfers your debt to another party, the assignee. This could change who you deal with regarding your debt. The assignee can now take legal steps to recover the debt from you. Thus, this might include court action.

How Debt Assignments Work

When a creditor offers credit to a borrower, they do so believing that the money they lend, along with the interest, is repaid on time. So, the lender waits to recover the money owed according to the timeframe stated in the contract.

In some situations, the lender might decide that they want to sell the debt to a third party because they no longer want to assume responsibility for servicing the loan. In this case, the debtor should be sent a Notice of Assignment (NOA). This should state that someone else is now responsible for collecting the outstanding debt. This is called a debt assignment.

It’s mandatory to inform the debtor when the debt is assigned to a third party so that they are aware of who they should pay the debt to. The payments won’t be accepted if the debtor ends up sending payments to the old creditor after they’re assigned. This might result in the debtor unintentionally defaulting.

Also, once the debtor receives this notice, it’s best that they verify that the new creditor has recorded the correct monthly payment and total balance. In some situations, the new assignee might even decide to make changes to the original terms of the loan. In this case, the creditor should notify the debtor without delay and give them sufficient time to respond.

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Legal Assignment vs Equitable Assignment

A legal assignment is when another company takes over the following from a creditor:

• Benefit of a debt
• The right to enforce the debt

This indicates that they have the right to seek court action over the loan.

However, when it comes to equitable assignment, it only transfers the benefit of the loan to a third party. In this case, there is no right to seek court action over the loan. Thus, in a situation where the assignee wants to take the debtor to court, they only have the right to work with the original creditor after the original creditor decides to take the debtor to court.

So, simply said, they don’t have the power to initiate court action themselves. Also, note that in order for the assignment to be effective, the debtor must be notified regarding the assignment. The debtor is obligated to make the payment to the assignee only after they get the notice.

Assignment vs Novation

When it comes to the assignment, the party that assigns will continue performing the obligation associated with the loan. However, the assignee is now entitled to the loan benefits.

For example, assume that you assign a debt, that a debtor owes to you, to another organisation. In this situation, you have some rights and obligations over the loan. But particularly the right to pursue legal action in court.

Meanwhile, when it comes to novation, it consists of a full transfer of both rights and obligations. For example, as per the previous scenario, the creditor would give the assignee company full power when it comes to both the obligations and the rights associated with the loan.

Assignment vs Selling

As mentioned before, the assignment of debt means that the right of an individual to collect a debt has been transferred legally from the assignor (original creditor) to the assignee (third party). Then, the debtors are informed regarding the assignment. They should then make the payments to the assignee.

However, keep in mind that the conditions and terms of the contract do not change.

When it comes to selling debt, this is where a lender sells their loan to another, usually for a lesser amount than what it’s worth. The buyer (most of the time a debt collection company) tries to collect the whole amount from the debtor.

Does an Assignment Need to be a Deed?

When delving into the law of assignment, a crucial question often pops up: is a formal deed essential to make the transfer of debt legitimate? The answer isn’t as straightforward as you might think. Let’s unpack this:

Often, a less formal agreement can do the job. However, in some cases, particularly when the original loan agreement was a deed, a deed for the assignment becomes necessary.

Understanding the importance of deeds in this context is key. If your original loan agreement was signed as a deed, the assignment might also need to be a deed. This adds a layer of formality and legal binding. A deed indicates a more serious commitment, making everyone involved fully aware of the transfer’s details.

Knowing your rights in these situations is non-negotiable:

• Whether it’s through a deed or an agreement, you’re entitled to be informed about the assignment. This ensures the process is fair and transparent.
• This notification is more than just a formality; it validates the transfer and helps you understand the change in your debt obligations.
• The use of a deed or agreement provides legal clarity. This helps in understanding your position in the new arrangement.
• In such situations, seeking legal or financial advice can be a wise move.

In the complex world of debt assignments, whether a deed is necessary depends on various factors. Understanding the role of deeds and your rights is essential in navigating these financial waters.

Benefits of Assignment of Debt

There are multiple reasons why a creditor might decide to assign the debt to another person. One of the main reasons for this is to improve liquidity or to reduce the risk. In some cases, the lender might also be wanting some capital urgently. Also, they might have accumulated a large amount of high-risk loans and be wary that most of them could default.

In such situations, lenders may be willing to assign them to another person swiftly, even for a very small amount. They are open to doing this as long as it will help to improve their financial outlook and appease worried investors.

In other cases, the creditor might decide the debt is too old to spend resources trying to collect it. They might even assume that since it’s old, it’s not worth assigning it to a third party to pick up the collection activity. In such an instance, a company will decide not to assign their debt to a third party.

Criticisms of Assignment of Debt

Even though the assignment of debt may seem like a good option for lenders, it also has a fair bit of criticism.

Over the past, debt buyers have been known to use various unethical practices in order to get paid. This includes constantly harassing debtors and issuing threats. In some situations, they have also been accused of chasing debts that have already been paid.

Additional Advice and Guidance

If you’re struggling with debt, note that there are many debt solutions available in the UK that you can consider taking up. Some of these include:

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However, note that while the right debt solutions will help to write off debt, choosing the wrong one might worsen your situation. So, we recommend you reach out to a debt charity for advice before you make the decision. Some debt charities you can reach out to include:

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• It refers to the transfer of a debtor’s obligation from the original creditor (assignor) to a third party (assignee).
• Legal Assignment: Transfers both the right to collect the debt and the right to enforce it legally, including court action.
• Equitable Assignment: Only the benefits of the loan are transferred, not the legal right to enforce it.
• Assignment maintains the original terms of the loan with a new creditor, whereas novation transfers all rights and obligations to a new party.
• In assignment, the right to collect the debt is transferred, while selling involves a financial transaction where the lender sells the loan, often at a lower price.
• Generally, a deed is not required for debt assignment, but it may be necessary when the original loan agreement is signed as a deed.
• Assignment of debt will be reflected in the credit report, including any updates on the loan terms and the new lender’s name.
• A formal notice is required, especially in legal assignments, to inform the borrower about the transfer of their debt.
• Once a notice is issued, the new creditor assumes the rights and obligations of the debt and may engage in various debt collection methods.
• Common reasons include avoiding the hassle of debt collection, lacking resources for legal action, or efficiency in debt collection through a third party like a collection agency.
• Under UK law, most debts have a limitation period of six years (twelve for mortgage loans), after which they might be written off if there’s no contact from the creditor.

Under UK law, the limitation period for most debts is six years. For mortgage loans, it extends to twelve years. If your creditor hasn’t contacted you within these time frames, you may have legal grounds to have the debt written off. This includes personal loans, credit cards, payday loans, and others.

The new lender takes on both the obligations and rights of the mortgage loan. Though rare, borrowers can also assign their mortgage to someone else. These assignments are recorded with the county recorder’s office for legal purposes.

Your credit report will reflect the change in lender and any new loan terms. You’ll see the new lender’s name instead of the old one. If you default under the new lender, they will report this to Credit Reference Agencies.

Under the Property Act 1925, it’s a formal notification to the borrower that their debt has been acquired by a new company. This notice is required in cases of legal assignment.

The new creditor assumes the benefits and obligations of the debt. They may hire a collection agency or use other methods to recover the debt, often avoiding court action to minimise costs.

Assigning debt is often done to avoid the trouble of collecting it. Some may lack the resources to take legal action against debtors. If a third party, like a debt collection agency, can handle repayment collection more efficiently, it’s a preferred choice.

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Debt Assignment and Assumption Agreement

Choose the state where this Agreement will be signed. This is usually the state where the debt was initially incurred, or where the creditor resides or does business.

Debt Assignment & Assumption Agreement

This Debt Assignment and Assumption Agreement ("Agreement") is made by and between the following parties: ________ , hereinafter known as "Assignor," having an address at the following:

________ , hereinafter known as "Assignee," having an address at the following:

and ________ , hereinafter known as "Creditor", having an address at the following:

This Agreement is made for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged.

Article 1 - ASSIGNMENT:

Assignor, an individual, hereby assigns, transfers, and conveys all of Assignor's debt (the "Debt") to Creditor, an individual, specifically in the total amount of $ ________ (________), to Assignee, an individual.

Article 2 - JOINT LIABILITY AND ASSUMPTION:

While Assignee accepts and assumes responsibility for repayment of the Debt as outlined within this Agreement and within the original debt contract, attached herein, Assignor and Assignee will become jointly liable for the Debt to Creditor. Creditor shall initially seek repayment from Assignee, but if Assignor defaults, Creditor may seek full repayment from Assignee.

Article 3 - REPAYMENT TERMS:

The repayment terms will be modified and Assignee will pay Creditor back as follows:

Article 4 - BINDING EFFECT:

This Agreement shall be valid and binding upon all of Assignor and Assignee's successors, transferees, heirs, and assigns.

Article 5 - GOVERNING LAW:

This Agreement shall be governed by and construed in accordance with the internal laws of Alabama without giving effect to any choice or conflict of law provision or rule. Each party irrevocably submits to the exclusive jurisdiction and venue of the federal and state courts located in the following county: ________ .

Article 6 - HEADINGS:

Headings to this Agreement are for convenience only. Headings shall in no way affect the provisions themselves and shall not be construed in any way that would limit or otherwise affect the terms of this Agreement.

Article 7 - 88 288525885588:

82 225828852822 22 2588 825222222 85588 82 85885 528288 82 8582822 525 882225 82 588 2552828.

Article 8 - 88 WAIVER:

8222 22 252 22528 22 2588 825222222 85588 82 522225 22 5582 8222 858825 82 522 582 25 588582882282 22 522 25522. 8282 52 5558282258 8582222 525222222 852 8228282522 858825 22 522 22 252 22528 22 2588 825222222 8228222 252 2552828. 82 858825 22 522 2252 25 252888822 22 2588 825222222 85588 8228282522 5 858825 22 522 22525 2252 25 252888822 25 22 252 8522 252888822 22 5 252552 5522. 2588552 22 522 25522 22 2222582 522 2252 22 2588 825222222 85588 222 8228282522 858825 22 8585 2252 25 522 22525 2252.

IN WITNESS WHEREOF, Assignor, Assignee, and Creditor have caused this Assignment to be executed on the following date: ________ .

Signature:_____________________________

State of Alabama

NOTARIZATION TO BE SIGNED BY ASSIGNEE:

State: Alabama

County: ________

On the following date: ________________________ before me personally appeared the above signatory. I am a Notary Public in and for the state of Alabama and the signatory above is personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name is signed herein and acknowledged that he/she/they executed the same.

WITNESS my hand and official seal:

Name: __________________________________

Signature: _______________________________

My commission expires: ____________________

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More U.S. consumers may need help managing their credit card payments. Roughly 6.9% of credit card users were in serious delinquency in the first quarter of 2024 — the highest rate since historic lows in 2021 — according to the Federal Reserve’s latest quarterly report on household debt and credit, released May 14.

If you’re behind on your credit card payments and looking for a solution, you might be considering debt settlement, which promises to help clear your debts. However, debt settlement is risky and should be a last resort for most borrowers.

How does debt settlement work?

Debt settlement is the process by which your debts are settled for less than you owe. Though you can settle debts yourself, many borrowers hire a for-profit debt settlement company.

Here’s how it works: A debt settlement company will ask you to stop making payments on your debts and instead funnel that money into an escrow account, which is a separate account set up by the settlement company. As your debts become increasingly delinquent, the settlement company will approach your creditor with an offer, using the money in the escrow account. Ideally, the creditor accepts the offer, with the thinking that some money is better than none. Then, your debt is cleared for the lesser amount.

Debt settlement isn’t free. Debt settlement companies may charge a fee of 15% to 25% of the amount you owe for each successful settlement. For example, if you owe $10,000 and the debt settlement company charges a fee of 25%, you’ll pay a $2,500 fee (in addition to the settled amount).

The average debt settlement client saves $1,440 after fees, or 31.9% of their debt burden, according to a 2023 economic impact report commissioned by the American Association for Debt Resolution.

Risks of debt settlement

Though debt settlement may sound promising, it can be a “very bumpy road,” warns Bryce McNitt, chief of staff for market offices at the Consumer Financial Protection Bureau. Settling your debts can take two to four years, and there are serious consequences to falling that far behind on payments.

“You very well could be in collections at that point, and your credit score will dive down,” McNitt says. “You could also face pressure tactics from collectors. If you're getting calls, if you’re getting a lawsuit, that’s very stressful.”

As interest and fees from your creditor pile up, you’re reducing any potential savings that debt settlement promises.

There’s also no guarantee a company can settle your debt. Some creditors won’t accept a debt settlement offer or work with debt settlement companies. Any debts you successfully settle may further hurt your credit score, since settled accounts stay on your credit report for up to seven years.

“Theoretically, there could be some use cases where it can work out, but I think the risks are just too high for most people,” McNitt says.

Other ways to tackle overwhelming debt

There are other, less-risky ways to get credit card debt under control.

Financial experts widely recommend debt management plans . These plans are offered by nonprofit credit counseling agencies and roll multiple unsecured debts into one at a lower interest rate, which makes the debt easier to pay off.

Though debt management plans may temporarily lower your credit score, successfully paying down your debt can help your score, says Justin Botimer, partner development manager at GreenPath Financial Wellness, a nonprofit credit counseling agency. Debt management plans also have lower fees, but many people don’t know about them, he says. 

“The reality is our industry doesn't have the big budgets that for-profit companies have,” Botimer says. “We hear all the time, ‘I wish I would have known about you sooner.’ This is after they’ve been wrangled into debt settlement.”

A debt consolidation loan is another alternative. You use the money from a loan to pay off your debts in one fell swoop, then pay back the new loan in fixed monthly installments, ideally at a lower interest rate. But debt consolidation loans can be tough to qualify for, because you need a strong credit score. Some credit unions and online lenders offer debt consolidation loans for borrowers with bad credit (629 score or lower).

If there’s no way you can repay your credit card debts, you can try to settle them yourself. Creditors are often willing to settle with borrowers directly, Botimer says, which saves you from paying a hefty fee to a debt settlement company and may preserve your relationship with the creditor. If the creditor won’t settle, you can ask for other relief options, like a reduced interest rate or lower monthly payment.

Bankruptcy may be an option for people whose debt payments account for a significant portion of their income. Though it may temporarily hurt your credit, bankruptcy can protect you from aggressive action from creditors, like lawsuits or wage garnishment.

A previous version of this article misstated the effect of debt management plans on your credit score. A debt management plan may temporarily impact your credit score. This article has been corrected.

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5 Myths About Debt Relief Nobody Should Believe in 2024

D ebt relief encompasses a variety of strategies, including creditor hardship programs, debt settlement, debt management, debt consolidation and bankruptcy. The debt relief option that will work the best for you will depend on the type of debt you have and the amount you owe, as well as your ability to repay it.

It also helps to understand the ins and outs of each type of debt relief , including the myths surrounding debt relief. 

Learn More: 8 Myths About Debt That Boomers Must Stop Believing Before They Retire

Check Out: 7 Common Debt Scenarios That Could Impact Your Retirement — and How To Handle Them

GOBankingRates surveyed 999 Americans to find out what they believe about debt relief and debunked the beliefs that are considered myths below . 

Myth: It Reduces the Likelihood of Legal Action by a Creditor

According to the survey, 23% of respondents believed that applying for some form of debt relief would reduce the likelihood that creditors would take legal action. 

Unfortunately, bankruptcy is the only debt relief option that affords you protection from legal action by a creditor. As soon as your case is filed with the court, creditors can no longer pursue money judgments against you due to an automatic stay order.

However, with debt settlement — a negotiated reduced payback amount in the form of a lump sum — you are not protected from a creditor taking legal action until the debt is settled with a binding written agreement. And with a debt management plan, you’re not legally protected from a creditor’s action until your debt has been paid in full within the terms of the agreed-upon payment plan.

Read Next: You Can Get These 3 Debts Canceled Forever

Myth: It’s a Last Resort

Approximately 21% of respondents believed that debt relief should be considered as a last resort. 

The truth is that debt relief involves negotiating or consolidating your debt to make it more manageable. And in some cases, such as if you opt for a creditor hardship program or a debt management program, it can be very helpful.

However, debt settlement is often considered as a last resort for people struggling with debt because it can impact your credit, cost a lot and result in charge-offs. Additionally, bankruptcy is considered even more of a last resort for various reasons, including that it can make it hard for you to get new credit in the future.

Myth: It’s a Dishonest Practice or a Scam

Approximately 9% of respondents believed that debt relief is a dishonest practice or a scam. 

Ben Klesinger, co-founder and CEO of Reliant Insurance Group and Helping Hand Financial , said that while it’s true that there are predatory companies out there, not all debt relief services are fraudulent. 

“Reputable organizations like Helping Hand Financial, which I co-founded, are committed to offering client-first, holistic financial strategies,” he said. “We ensure transparency in our processes and aim to help individuals regain financial stability without falling prey to scams.”

Myth: It Will Ruin Your Credit Score

The thought that debt relief will ruin your credit score can certainly be a deterrent. However, it’s not true. 

“One prevalent myth is that debt relief will entirely ruin your credit score,” Klesinger said. “While debt relief strategies like debt settlement can impact your credit, it’s not necessarily a permanent or catastrophic effect. For example, if you’re dealing with overwhelming credit card debt and opt for a debt management plan, you might see a temporary drop in your score. However, effectively managing and eventually eliminating your debt can lead to a long-term improvement in your creditworthiness.”

Myth: Using a Debt Relief Solution Means You Are a Failure

Klesinger said that many people believe they must handle their debts alone and that seeking help is a sign of failure. 

“This is far from the truth,” he said. “Just as businesses seek specialized insurance coverage to mitigate risk — like professional liability insurance for dental practices or cyber liability for legal firms — individuals can benefit from professional debt relief services. With customized support, you can navigate through financial crises more efficiently and with less stress.”

Methodology: GOBankingRates surveyed 999 Americans aged 18 and older from across the country on between May 3 and May 7, 2024, asking three different questions: (1) Is there anything standing in your way toward paying off your debt(s)? (select all that apply); (2) What are your concerns about your financial situation right now? (select all that apply); and (3) Which of the following are true of debt relief? (select all that apply). GOBankingRates used PureSpectrum’s survey platform to conduct the poll.

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This article originally appeared on GOBankingRates.com : 5 Myths About Debt Relief Nobody Should Believe in 2024

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Accredited Debt Relief review 2024

If you have at least $10,000 in unsecured debt, adr could be the debt solution for you..

One of the top debt-settlement companies in the U.S., Accredited Debt Relief claims it can cut clients' payments by up to 45% and get them debt-free in as little as two years. It's helped more than 300,000 clients resolve over $3 billion in debt, but there is a fee, on average, of 25% of your total debt. In addition, signing up for debt settlement can have a major impact on your credit and comes with other risks. Find out how ADR works, how much it costs, how it stacks up to competitors and what you should know before enrolling.

Accredited Debt Relief

25% of enrolled debt

Accredited Debt Relief has been in the business since 2011 and offers debt relief options to those with at least $10,000 of debt, including credit card debt, personal loan debt, and medical debt.

App available

• Free consultation
• Monthly payments reduced by as much as 45%
• A+ rating from the Better Business Bureau
• Need at least $10,000 in unsecured debt to enroll
• Fee can average 25% of your enrolled debt
• Not available in every state

Accredited Debt Relief pros and cons

How does accredited debt relief work, how much does accredited debt relief cost.

• Accredited Debt Relief: Pros and cons
• How does Accredited Debt Relief compare?

Is Accredited Debt Relief legit?

Does using accredited debt relief hurt your credit, how to sign up with accredited debt relief.

• You don't pay if there is no settlement offer
• Must have at least $10,000 in unsecured debt to qualify
• Fee is 25% of enrolled debt, not negotiated amount

Accredited Debt Relief (ADR) is available in 37 states and Washington, D.C. To enroll, you must have at least $10,000 of unsecured debts , like credit cards, personal loans, medical bills or private student loans. Similar to most debt settlement companies , ADR doesn't work with secured debt, such as mortgages or car loans .

After choosing which accounts to enroll in, you're instructed to stop paying those creditors and begin making deposits in an FDIC-backed savings account while Accredited Debt Relief negotiates to lower your balances.

ADR is only paid after a settlement is negotiated and you've made at least one payment but the fee is a percentage of the original debt, not the settled amount. According to the company, you can lower your monthly payments by as much as 45% before the fee is taken, and those who complete a settlement program can clear their debt in 24 to 48 months.

While it's not a lender, Accredited Debt Relief refers clients to Beyond Finance, which provides debt consolidation loans of up to $100,000.

Working with any debt settlement company comes with risks : You'll be asked to stop paying your creditors, which could add penalties and interest and further hurt your credit score. It may also open you up to lawsuits. In addition, any forgiven debt will be subject to income tax.

Accredited Debt Relief offers a free consultation and, even after you enroll, it doesn't charge any upfront fees. Instead, it takes a fee each time a settlement is reached. According to the company, the fee is typically 25% of the original debt.

Someone coming to Accredited Debt Relief with $20,000 in credit card bills, for example, would pay about $5,000 to ADR when the debt is settled. Some competitors have a broader fee range and you may be charged less.

Find a debt settlement solution that works for you

How accredited debt relief compares .

Here's how ADR stacks up against two major debt relief companies.

Accredited Debt Relief vs National Debt Relief

National debt relief.

15% to 25% of enrolled debt

National Debt Relief has been in business since 2009, and has helped hundreds of thousands of people get out of debt. While National Debt Relief won't be a fit for people who owe less than $10,000, it can be a good option for those with large debts.

Accredited Debt Relief and National Debt Relief both negotiate with creditors to lower unsecured debts. ADR's fees average 25% of the enrolled debt, though, while National Debt Relief cites a broader range of between 15% and 25%. While Accredited Debt Relief only operates in 37 states, National Debt Relief is available everywhere but Oregon, Vermont and West Virginia.

Both companies work with lending partners that offer debt consolidation loans of up to $100,000. Neither has a ceiling on the amount of debt they'll work with, but Accredited Debt Relief's minimum is $10,000, compared to $7,500 for National Debt Relief. If you're carrying a smaller burden, National Debt Relief might be the option for you. But if you have at least $10,000 in unsecured debt and live in a state where Accredited Debt Relief operates, a free consultation may be worthwhile.

Accredited Debt Relief vs Americor

Americor debt relief.

14% to 25% of enrolled debt

Americor offers debt relief options for those with more than $7,500 of unsecured debt. It's been in business for over 15 years and also offers debt consolidation options. It's been accredited by the American Association for Debt Resolution and the BBB.

Another leader in the debt settlement space, Americor works with clients carrying as little as $7,500 in unsecured debt. Americor is also available in more states (everywhere except Colorado) and its fee range is considerably broader, averaging between 14% and 29% of the enrolled balance. Both Americor and Accredited Debt Relief work with partners that offer debt consolidation loans. Americor's partner, Credit9, has a $40,000 loan cap, which is less than half the $100,000 Beyond Finance makes available.

Accredited Debt Relief is a legitimate business with an A+ rating from the Better Business Bureau. It claims to have helped over 300,000 clients repay more than $1 billion since its founding in 2011. Accredited Debt Relief is also a member of the American Association for Debt Resolution, the International Association of Professional Debt Arbitrators and the Consumer Debt Relief Initiative.

Working with any debt settlement company can adversely affect your credit, since you'll be stopping payment to your creditors. Payment history accounts for 35% of your credit score , the largest slice.

You may also be saddled with additional fees or subject to collections or lawsuits by creditors.

If you are significantly behind, it might not make a big difference to you. And if Accredited Debt Relief can successfully lower the amount you owe, your score should go back up as you make payments.

If you're only a payment or two late, however, you may want to consider other options, like a debt consolidation loan or a debt management plan , which can make less of an impact on your credit and cost a lot less. (Plans average $30 to $50 a month). The  National Federation for Credit Counseling lists reputable agencies that offer debt management solutions.

To work with Accredited Debt Relief, you'll need to have at least $10,000 in unsecured debt and live in a state the company operates in. On the Accredited Debt Relief website , you'll be asked to input the amount of debt you owe, as well as your name, phone number, email address and state of residency. You'll get an online quote with your new estimated monthly payment, how much you'll save and how long it will take to finish the program. A consolidation specialist will then reach out to discuss options.

You can also reach the company by emailing  [email protected] or calling 888-710-1253, weekdays from 8 a.m. to 11 p.m. and weekends from 8 a.m. to 10 p.m.

Is Accredited Debt Relief right for me?

Accredited Debt Relief is a leading debt settlement company with broad availability and a strong record of customer satisfaction. Its fee is higher than some competitors, however, and you have to have at least $10,000 in unsecured debt to apply.

Before using a debt settlement service, you should understand the financial and legal risks and consider alternatives like a debt consolidation loan or a debt management plan .

Is Accredited Debt Relief legitimate?

Accredited Debt Relief is a member of the American Association for Debt Resolution and the Consumer Debt Relief Initiative. It's also received thousands of positive reviews on Trustpilot and the Better Business Bureau website.

Accredited Debt Relief typically charges a fee of 25%, though the exact amount can vary.

Does Accredited Debt Relief work with tax debt?

Accredited Debt Relief does not negotiate tax debts or secured debts like mortgages and car payments.

What's the difference between debt settlement and debt consolidation?

Debt settlement involves negotiating with creditors to lower the amount you owe. Debt consolidation typically means taking out a lower-interest personal loan to pay off high-interest balances.

Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox.  Sign up here .

Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every debt relief review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of debt relief products . While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

Catch up on CNBC Select's in-depth coverage of  credit cards ,  banking  and  money , and follow us on  TikTok ,  Facebook ,  Instagram  and  Twitter  to stay up to date.

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