Notices of assignment of debt – what they are and why they matter – Charges, Mortgages, Indemnities

A notice of assignment of debt is required by Queensland law
when a debt is assigned to a new creditor. Issued to the debtor, it
essentially documents that the debt has been transferred from the
old creditor (assignor) to a new one (assignee).

It’s the new creditor’s responsibility to send the
notice to ensure they:

• Comply with the law – In Queensland, the
  notice of assignment of a debt should be in writing and comply with
  section 199 of the Property Law Act 1974 (QLD). Issuing such notice
  to the debtor is a precondition for the assignment becoming legally
  effective.




• Protect their rights as a creditor
  – The notice of assignment needs to be
  issued before the new creditor can collect the debt. Failure to do
  so can result in the debtor continuing to make payments to the old
  debtor, which can lead to disputes and complications.




• Protect the debtor’s rights –
  Letting the debtor know there’s a new creditor to whom they owe
  money avoids confusion and potential misdirection of funds.




• Encourage transparency and maintain accurate records
  – Providing a notice of assignment fosters
  transparency in the debt collection process and helps maintain an
  accurate record of the debt’s status. This latter point is
  particularly important during a merger, ensuring a smooth
  transition and avoiding future complications.

IS THERE A LIMITATION PERIOD OR ANYTHING ELSE TO BE WARY
OF?

The Property Law Act 1974 (QLD) doesn’t specify an exact
timeframe within which a new creditor must issue a debtor a notice
of assignment of debt, but there are some important time
considerations to keep in mind:

• Prompt notification –
  Despite there being no explicit time limit, it’s generally
  recommended that the notice be provided promptly after the
  assignment has taken place. The key practical reason for this is to
  avoid the debtor making a repayment to the old creditor, which can
  make it tricky for the new assignee to recoup the money.




• Limitation period for debt recovery –
  The Limitation of Actions Act 1974 (QLD) stipulates most debts have
  a limitation period of 6 years from the date the cause of action
  accrued (when the debt became due and payable). If legal action
  isn’t commenced within this period, the creditor can lose their
  right to recover the debt. Providing a timely notice of assignment
  ensures the assignee can take legal action to recover the debt if
  necessary, within the limitation period.




• Continuing cause of action – For some
  debts, such as those arising from a periodic contract or instalment
  payments, each missed payment can create a new cause of action. In
  these cases, the limitation period restarts with each missed
  payment. However, it’s still important to provide a notice of
  assignment as soon as possible to avoid confusion and ensure proper
  debt management.

So while there’s no specific limitation period for providing
a notice of assignment of debt in Queensland, it’s important to
ensure you receive repayments from the get-go and are able to fully
recoup the debt within the limitation period for debt recovery
(generally 6 years).