ARTICLE
13 April 2024

Notices of assignment of debt – what they are and why they matter

RC
Rostron Carlyle Rojas

Contributor

Rostron Carlyle Rojas is an Australian firm providing accessible legal advice across business and personal law. With offices in Brisbane and Sydney and technology to serve overseas clients, they prioritize building relationships with clients.
A notice of assignment of debt is required by Queensland law when a debt is assigned (transferred) to a new creditor.
Australia Finance and Banking
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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).

ARTICLE
13 April 2024

Notices of assignment of debt – what they are and why they matter

Australia Finance and Banking

Contributor

Rostron Carlyle Rojas is an Australian firm providing accessible legal advice across business and personal law. With offices in Brisbane and Sydney and technology to serve overseas clients, they prioritize building relationships with clients.
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