What Is an Assignment of Debt and How Can You Fight It?

Debt collectors coming after you for a past due account? You might wonder if they even have the right to sue you.

Understanding debt assignment can help you beat a debt collector in court.

What Does Assignment of Debt Mean?

Assignment of debt means your debt has been transferred to another party. The new owner gets all rights and obligations from the original creditor.

A debt collector now owns your debt. They take responsibility for collecting what you owe.

The legal transfer makes them the new creditor. You must deal with them instead of the original lender.

How Does Debt Assignment Work?

Your original creditor lent you money expecting repayment with interest. They waited for you to pay according to your contract.

When your debt is assigned, you must receive notification. The notice tells you who owns the debt now.

You need to know where to send payments. Sending money to the wrong creditor can cause default.

Check the balance and monthly payment amount when you receive notice. Sometimes errors occur during the transfer.

You may be able to negotiate new loan terms. The new creditor must respond to your requests.

Why Creditors Sell Debts

Creditors assign debts for several business reasons. Boosting liquidity and reducing risk are the main drivers.

Your creditor might need capital quickly. They sell debts to collection companies for immediate cash.

High-risk loans worry creditors about potential defaults. Selling these debts for pennies on the dollar improves their financial outlook.

Some creditors think old debts are not worth pursuing. They may abandon them entirely.

Debt collectors must follow the Fair Debt Collection Practices Act. The FTC oversees this law.

Collectors can only call between 8 am and 9 pm. They cannot call you at work if you tell them to stop.

FDCPA violations give you grounds to countersue. You may recover damages and attorney fees.

Problems With Debt Assignment

Debt assignment has faced criticism for decades. Debt buyers often engage in questionable practices.

Some collectors call consumers at all hours. They harass people to pay debts they may not owe.

Collectors sometimes contact your friends and family. Some even use threatening or abusive language.

Debts sold multiple times create confusion. You might be chased for debts you already paid.

The amount claimed may differ from what you actually owe. Record-keeping errors happen during transfers.

How to Respond When Debt Collectors Contact You

Debt collectors may call you constantly after assignment. Harassment can continue for months or years.

Ignoring calls sometimes works if small amounts are involved. But larger debts often lead to lawsuits.

Never ignore a debt collection lawsuit. Ignoring it guarantees you lose.

Use the debt assignment process to your advantage. Debts sold multiple times lack proper documentation.

Make the collector prove you owe the debt. They must show the correct amount and ownership chain.

Tracking down paperwork becomes difficult after multiple sales. Many collectors cannot provide proper proof.

Our partner Solo can help you respond to debt lawsuits. File an Answer with your clerk of court.

Send your Answer to the debt collector via certified mail. Document everything for your records.

Negotiating With Debt Buyers

Third-party debt buyers often settle for less. They purchased your debt for pennies on the dollar.

You can negotiate a low settlement amount. Debt buyers do not expect full payment.

Even without settlement, document all interactions. Collection agents routinely violate the FDCPA.

Violations give you grounds for a counterclaim. You may demand compensatory damages.

Keep detailed logs of every call and letter. Evidence of harassment strengthens your case.

Your Rights Against Debt Collectors

You have strong legal protections under federal law. Debt collectors must respect your rights.

Request debt validation in writing within 30 days. Collectors must prove the debt is yours.

They must stop calling if you send a cease communication letter. All contact must then be through mail.

You can dispute incorrect amounts or ownership. Make them prove every detail of their claim.

Document FDCPA violations carefully. These violations become leverage in your defense.

Our partner Solo helps you understand your rights. You can fight back against aggressive collectors.

Steps to Take If You Are Sued

Receiving a lawsuit summons is stressful but manageable. Take immediate action to protect yourself.

Read the complaint carefully and note your deadline. Missing the deadline results in automatic judgment.

File an Answer within the required timeframe. Your Answer should include affirmative defenses.

Challenge the collector to prove standing. They must show they own the debt.

Request documentation of the original debt. Many collectors cannot produce the required paperwork.

Appear at all court hearings on time. Failing to appear gives them a default judgment.

Consider settling if the debt is valid. Settlements often reduce the amount significantly.