Debt Assignment

AAA

DEFINITION of 'Debt Assignment'

A transfer of debt, and all the rights and obligations associated with it, from a creditor to a third party. Debt assignment may occur with both individual debts and business debts. The company assigning the debt may choose to do so in order to improve its liquidity and/or to reduce its risk exposure.

INVESTOPEDIA EXPLAINS 'Debt Assignment'

The debtor must be notified when a debt is assigned so that he or she will 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, which could cause the debtor to unintentionally default. Also, when a debtor receives such a notice, it is a good idea for him or her to verify that the new creditor has recorded the correct total balance and monthly payment for the debt owed.

RELATED TERMS
  1. Assignment Method

    A method of allocating organizational resources. The assignment ...
  2. Third-Party Claims Administrator

    This type of administrator processes claims for a third-party ...
  3. Assignment

    1. The transfer of an individual's rights or property to another ...
  4. Creditor

    An entity (person or institution) that extends credit by giving ...
  5. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  6. Debtor

    A company or individual who owes money. If the debt is in the ...
Related Articles
  1. What Is A Corporate Credit Rating?
    Investing Basics

    What Is A Corporate Credit Rating?

  2. The Importance Of Your Credit Rating
    Credit & Loans

    The Importance Of Your Credit Rating

  3. Off-Balance-Sheet Entities: An Introduction
    Investing

    Off-Balance-Sheet Entities: An Introduction

  4. What are the differences between chapter ...
    Entrepreneurship

    What are the differences between chapter ...

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center