DEFINITION of 'Debt Assignment' :
A debt assignment means the debt transfer including all the rights and obligations associated with it, from the creditor to a third party who is wiling to. Debt assignment can be happened for 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.
BREAKING DOWN 'Debt Assignment' :
The debtor must be informed about the assignment of a debt so that he or she can make the payments to the new creditor. 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.
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