Deed of Assignment of Debt

Use our Deed of Assignment of Debt template in order to transfer (or sell) the right to recover a debt. To transfer a debt legally between parties, it is necessary to enter into a written transfer document. Once the transfer document has been signed by the Assignee (the party transferring the debt) and the Assignee (the party receiving the right to collect the debt), notice must be given to the debtor (the person or company that owes the money). You should give the notice within 7 days of assigning the debt. So we have included a template notice with the download. Unless you give the notice, the new owner of the debt won’t be able to enforce the debt by suing.

This template is for use whether:

• the debtor is an individual or a company; and
• the creditor is an individual or a company.

If the debt is the result of a successful court case, then instead use our Deed of Assignment of a Judgment Debt.

For general information about what an assignment is, have a look at this Wikipedia entry.

How to Use our Deed of Assignment of Debt Template

The deed of Assignment of a debt is in template form. So you can edit it to your specific circumstances. You can download it in Microsoft Word. Once you have downloaded it, edit the template agreement to suit. Our guidance notes, which we include with the download, will make this easy for you.

An Assignment of Debt is a simple agreement. As a result, the drafting time you need to complete the document is minimal.

A UK solicitor, experienced in this area of the law, has drafted the template. Therefore, you get the peace of mind that you are using a suitably-drafted agreement. You have the added benefit of substantial savings on hiring a solicitor yourself.

Giving Notice of the Assignment

As we state above, it is important that someone gives notice of the assignment of the debt to the debtor. You should do this within 7 days of the assignment’s taking place. Either party to the deed of assignment of debt can give the notice to the debtor.

If you are the party receiving the assignment of the debt, then we recommend that you get the Assignor to sign the notice and send it to the debtor yourself. That way you can be certain that it gets there. So send it by “signed for” or “special delivery” post.

If you have any questions about the deed of assignment, then read our blog article, which may well answer them.

Guide to our Deed of Assignment of a Debt

We have drafted our template so that you simply need to replace the wording in the square brackets with wording that is appropriate to you. The remainder of this page is a preview of the key provisions of the guide. You receive the full guide with your purchase. The guide walks you through each clause in the template and explains what you need to add within the square brackets.

Clauses in this Deed of Assignment of a Debt

Party clauses – You will need to insert the names and addresses of party 1 (the Assignor) and party 2 (the Assignee). We have drafted the template on the assumption that the parties are companies. If either of parties 1 and 2 is not a company, then replace the wording for it as applicable using the format:

“[NAME] of [ADDRESS]”

Background

(A) Add in the name of the party that owes the debt and amount of the debt.

Numbered clauses

1.Interpretation

 This clause defines the main terms used in the deed of assignment of debt and you do not need to add anything.

2.Assignment

This clause transfers the rights and benefit of the debt from the Assignor to the Assignee. If the Assignee is paying the Assignor for the debt, then set out the amount it is paying for the debt in clause 2.1. Traditionally this is at a significant discount to the full amount of the debt, on the basis that the Assignee is taking the risks that (a) it proves not to be recoverable in full or (b) expenses are incurred in making the recovery.

3.Warranties and Indemnity

This clause confirms that the Assignor does indeed own the benefit of the debt and has not assigned it to anyone else. The clause also includes a requirement that the Assignor writes to the debtor to notify them that the debt has been assigned to another party. The Assignor must send this written notification within 7 days of the date that the Deed of Assignment of Debt is entered into. You may want to delete clause 3.2 which is a warranty from the party assigning the debt that if it becomes necessary to incur costs to recover the debt then they will pay those costs.

There are a few other standard clauses that do not need mention here – they are fully covered in the guide. You then sign the document as a deed and the guide tells you how to to that.

Schedule – Notice of Assignment of Debt

The notice that you need to give to the debtor is contained in the schedule. Fill it in, sign it and send it to the debtor within 7 days of the date of the assignment. The template assumes it is the original creditor giving notice, but either party can do so.

Here at Legalo we provide cost-effective document and agreement templates to businesses to enable them to do more legal matters themselves. So take a look at our range of debt recovery letters to assist your business in better credit control.