Is Your Notice Assignment of Debt Valid?

A creditor (assignor) can transfer their rights to receive and seek payment of a debt to a third party (assignee). Once the transfer of their rights has occurred, the assignor can then seek payment of that debt from the debtor. Once assigned, the assignee has the legal right to such debt and has the power to give a good discharge of it  without the concurrence of the assignor.[1]

There are two factors that an assignee must consider before attempting to recover a debt from a debtor:

SERVICE OF THE NOTICE

The assignee must issue a notice of assignment of debt (“Notice”) to the debtor at the debtors last known residential address. This is where the confusion and issues around the service of the Notice can occur by the debtor. Generally, a bank will assign the debt to a collection company after years of attempting collection/locating debtor. It is at this stage that the debtor may have moved residential addresses and may not receive the Notice. The assignee is required to comply with section 347 of the Property Law Act 1974 (Qld), whereby service of any notices must be made to the person’s last known place of abode.[2]

STATUTE OF LIMITATIONS

An assignee must ensure that they are within the statue of limitations to legally commence recovery of the debt. The purpose of a statute of limitations is to limit the delay for creditors to take action against a debtor for outstanding monies. The limitation period for a contract debt is six (6) years, calculated from the point of breach.[3] Where an assignee has been assigned a debt, the point of breach will commence from the date the debt was assigned to the assignee. However, in some circumstances, where a debtor acknowledges the debt or makes a payment in respect of the debt, the point of breach starts from the date of acknowledgement or the last payment made by the debtor.[4]

SLF Lawyers specialises in legal recoveries and various enforcement options and can assist in providing advice with respect to ensuring the Notice has been issued correctly.

If you have any questions, please contact Partner – Mark Smith of SLF Lawyers Brisbane on (07) 3839 8011.


[1] s199 Property Law Act 1974 (Qld).

[2] Ibid s347(1)(b).

[3] s10 Limitation of Actions Act 1974 (Qld).

[4] Ibid s35(2).

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