In the realm of financial recoveries, the assignment of credit contracts in default is a well-established practice. Banks and financial institutions frequently assign defaulting credit card and personal loan accounts to debt collectors in an effort to streamline their cost-effective recovery processes. At RCR Lawyers, we recognize the importance of understanding the legal intricacies surrounding the assignment of debts, and we are here to provide you with valuable insights and guidance.
Assignment of Debts: The Legal Framework
Under the Property Law Act 1974 (Qld), specifically in Section 199, provisions are made for the assignment of debt at law. This allows for the transfer of debt ownership from the original credit provider (the assignor) to the new owner (the assignee). However, it’s crucial to note that this assignment must be absolute, and written notice must be given to the debtor. Importantly, the debtor’s consent is not a prerequisite for this assignment.
Once a debt is assigned, all rights and responsibilities vested in the original credit provider are now transferred to the new owner. This transfer grants the assignee the authority to collect on the debt as if they were the initial credit provider. This includes the ability to charge interest as per the original contract terms and to initiate legal proceedings to recover the debt.
The National Credit Code: A Comprehensive Framework
The National Credit Code, a crucial component of the National Consumer Credit Protection Act 2009 (Cth), extensively addresses the assignment of debt. It outlines the responsibilities of all credit lenders, providing a comprehensive framework for debt assignment and recovery.
Debtor Confusion and Legal Challenges
For debtors, the collection of assigned debts can often lead to confusion. While written notice of the assignment is a requirement, this notice extends only to the last known address (or last provided address) of the debtor. Many debtors are not familiar with the concept of debt assignment and often have not scrutinized the details of their credit contracts. As a result, an assignee who initiates legal proceedings to recover an outstanding balance may encounter significant obstacles.
In legal matters related to assigned debts, the case of Clark v Gallop Reserve Pty Ltd  QCA 146 serves as an illustrative example. In this case, the validity of the Westpac Bank Corporation’s Deed of Assignment was challenged, as it did not explicitly include the judgment debt in the description of the outstanding debt owed to Westpac.
Philip McMurdo JA, in his judgment, emphasized that the wording “Westpac assigns to the Transferee all of Westpac’s full, absolute and entire legal and beneficial interest, right and title in and to the Westpac Debt, the Westpac Finance Documents, and the Westpac Guarantees” was sufficient to encompass the judgment obtained by Westpac before assignment. This exemplifies the court’s acknowledgment of the validity of the debt assignment and the assignee’s right to enforce the judgment debt.
Enforcement Options for Assignees
Once a debt has been validly assigned (following the absolute written assignment and proper notice to the debtor’s last known residence), and there are no offsetting claims available to the debtor, the assignee is entitled to pursue legal steps to recover the outstanding debts. These enforcement options may include:
- Commencing legal proceedings
- Obtaining judgments
- Enforcing judgments through methods such as statutory demands, bankruptcy notices, creditors’ petitions, warrants for property seizure and sale, garnishee orders, and more.
The RCR Recovery Team possesses extensive knowledge of various enforcement methods applicable in all Australian jurisdictions, particularly in the recovery of assigned debts. We are also well-equipped to provide guidance on the assignment of debts and the obligations that arise once such assignments occur.
If you have any inquiries or require further information on this topic, please don’t hesitate to contact RCR Recoveries at 07 3009 8444. Our legal team is ready to assist you with any questions or concerns you may have regarding the assignment and recovery of debts, ensuring that you have the necessary support to navigate these complexities with confidence.
At RCR Lawyers, we are dedicated to empowering you with the knowledge and guidance you need to effectively manage and recover assigned debts while upholding the highest legal standards.