[lbo-talk] Selling debt & informing debtors

knowknot at mindspring.com knowknot at mindspring.com
Wed Aug 19 22:07:29 PDT 2009


On 8/19/09, "D. T. cochrane" <dtc at yorku.ca> wondered:

> When a lender sells debt to a third party that then

> securitizes it and further sells it on, is the debtor

> informed of these changes in the credit relationship?

There isn't a "one size fits all!" answer, whether as a matter of law or of practice.

Besides differences in applicable law from one jurisdiction to another (do you ask what more or less generally pertains in Canada? in Gt. Britain? in the U.S.? elsewhere?), the particular nature of the debt and also the context/purpose of the question also will matter. E.g., you aren't sufficiently clear whether the point of the question has to do with whether absence of notice of assignment in whatever are the relevant places in question discharges the debt or whether, e.g. (and as has become increasingly common), the absence of notice may enable the debtor to continue to pay and to be credited in a way that will bind the assignee for payments to the assignor until the debtor is given notice of the assignment.

Perhaps above all, both as a matter (more or less) general practice and of law, you don't say (regardless whether actually re. some particular transaction or classes of transactions or hypothetically) what the parties contracted, although there very commonly are provisions in many differing kinds of loan agreements to the effect that the debt may be assigned by the creditor without notice to the debtor.

In sum, it will depend . . .



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