There are times when your client isn’t paying others besides you. Wouldn’t it be great to join forces with the other party by taking an assignment of their claim, or assigning yours to them? A united force through debt assignment to pursue a delinquent customer has both risks and rewards.
Why consider debt assignment?
It may be that on a project you are one of two or of many who have not been paid. Usually it’s every man for themselves. And, every creditor who wishes to enforce their rights to get paid hires their own collection attorney. The parties who take their case past the demand phase to litigate, arbitrate or mediate, must go out of pocket to pay costs and sometimes advance fees.
Wouldn’t it be great to combine the claims and pursue the customer together? The idea to get paid, and share the cost with your fellow creditors? Can you? Should you?
Can you assign a claim?
Make sure to check the underlying contract or agreement with the customer. The contract may specifically prevent you from assigning the claim.
New York permits you to assign a claim, assuming you are not barred based on the terms of the contract or agreement.
The assignment given to another must be for monetary consideration. Without “consideration”, one of the elements of a legally binding contract, you do not have a valid assignment and you cannot act on the claim.
With a valid assignment, the assignee would be able to enforce their rights to get paid. This assumes an assignment of the claim was not prohibited by and between the original parties.
Would you want to take a debt assignment and join forces with another to collect?
It’s usually the first claim in that gets paid in debt collection cases when your client is in business and has assets. By joining forces with another, there may not be enough payment to cover more than one claim. If that is the case, you will need to share the proceeds with another.
Joining forces and taking debt assignment may be great for sharing costs. However, there is a risk that it may prevent you from getting paid what you are owed.
Are you owed money by a client and looking to get paid? Contact us to review your case and explore collection options.