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Debt In New Zealand

Debt Assignment

Debt Assignment is the transfer of rights under a credit contract from one creditor to another creditor.

In order to free up working capital, many creditors sell debt, passing the debt from their balance sheet to the balance sheet of another person or organisation.
The original creditor receives a payment from the debt purchasor, either in part or in full for the asset value of the debt.

The debtor would see the new owner of the debt as the legal title holder, as if the new creditors name had been 'inserted' into the credit contract to replace the previous creditor.

Under the full assignment, the new creditor would be required to perform all obligations of the credit contract, as if they were the original creditor, in order to receive the rights associated under the contract.



In new Zealand, in order to be an assignee under a credit contract, the creditor would need to be classified as a 'creditor under a credit contract'.

Things to note in Debt Assignment;
(See further explanations at the foot of this page)

  • (1) There should be some Notice of assignment.
  • (2) Assigned debts should not have added collection costs.
  • (3) The new creditor cannot act outside the terms of the original contract.

(1) Notice of assignment
In order that the debtor is not placed in a situation where they are 'confused' by who owns the debt, and is not placed in a vulnerable position (such as being 'scammed'), it is best practice for the creditor that has sold the debt to another party to provide written notice of assignment to the debtor, in cases where there is a credit contract the debtor should be advised who the new creditor is and what their financial services provider number is.

(2) Adding collection costs to an assigned debt.
Often debt is sold to creditors that are also debt collection agents.

Debt collection agents are considered under the credit contract/contract, to be the new creditor, and acting as a creditor under a credit contract, and although they may use many debt collection tactics, thery are not acting as a debt collection company.

From time to time, debt collectors add collection costs to the debt that has been assigned to them, and unless the credit contract specifically says that the creditor can add collection costs, the collector (acting as the new creditor) cannot add such costs.

(3) Acting outside the original credit contract.

When some creditors receive an account by assignment they attempt to change the credit contract terms in order to maximise the income from the debtor.

Some creditors do this directly by advising you (the debtor) have to agree to their terms or either face higher costs or they will take you to court, this sort of commercial coercion is commonplace and daily functions of some New Zealand debt collectors.

Other debt purchasors are owned by collection companies (example SRL-RML), and as soon as the debt is assigned to them they outsource it (see debt collection) to their own company for debt collection and charge fees for doing so.

From time to time, debt collectors add collection costs to the debt that has been assigned to them, and unless the credit contract specifically says that the creditor can add collection costs, the collector (acting as the new creditor) cannot add such costs.

Debt Assignment Definitions

Assignment:Transfer of debt to a third party:(Investopedia)

Debt:Something, especially money, that is owed to someone else, or the state of owing something:(Cambridge Dictionary)

Collection:An amount of money collected from several people, or the act of collecting money: (Cambridge Dictionary)

Services:the particular skills that someone has and can offer to others:(Cambridge Dictionary)

Services:Anything which is not goods or money:GST Act 1985 NZ LEG