Debt Assignment and Assumption Agreement

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Updated October 30, 2021

A debt assignment agreement allows a person who owes money to assign the debt to someone else who assumes its obligation. This is common when a person takes possession of an asset where the seller still owes money. The buyer will purchase the asset and assume the debt.

Lender’s Approval

In most loan agreements and notes, the lender will be required to approve the new debtor. This can be done with a signed waiver or statement by the lender.

Sample: Debt Assignment Agreement

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How to Write

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Section 1 The Parties

(1) Effective Assignment Date. This agreement must clearly establish the calendar date when the assignment of the debt to the Assuming Party becomes active.

(2) Debtor Name And Mailing Address. The current Holder of the debt should be identified as the Debtor in this agreement. To this end, record the Debtor’s name and address.

(3) Assuming Party. The name of the Party that will be charged with paying the debt will be the Assuming Party. Furnish the Assuming Party’s entire name and mailing address.

(4) Creditor Name And Address. Naturally, it will be important that the debt is properly defined. This requires that the Creditor is named and that his or her mailing address is presented. If this is a Business then its legal Company Name must be used to identify the Creditor properly.

Section 2 Assignment Of Debt

(5) Sum Of Debt. The amount of money required by the debt being discussed is needed to complete the statement made in Section 2. This must be the total dollar amount that the Creditor expects the Debtor to pay.

(6) Assuming All Debt. The debt that is being transferred requires definition. If the total amount of the debt owed by the Debtor will be transferred to the Assuming Party, then the “All Of The Debt” checkbox should be selected.

(7) Assignment Of Portion Of Debt. If the Assuming Party will only take on part of the concerned debt then select the “Portion” checkbox. In addition to this selection, supply the dollar amount that the Assuming Party will pay to the Creditor to satisfy the part of the debt held by Debtor.

Section III Consent From Creditor

(8) Creditor Consent Required. In some cases, the Creditor must be informed of this assignment and provide consent for the Debtor and Assuming Party’s actions in this document. If so, then select the first checkbox statement from Section III. Additionally, supply the number of days before the effective date when the Creditor consent must be provided.

(9) No Consent Of Creditor Required. Select the “Not Required” checkbox to indicate that the Creditor’s consent is not needed for this contract’s execution.

Section VIII Governing Law

(10) Governing Law. Identify the State where this agreement will be effective and be enforceable.

Section IX. Additional Terms

(11) Additional Terms. Any agreements between the Debtor and the Assuming Party or conditions placed by the Creditor that should be considered part of this assignment should be documented in Section IX.

(12) Debtor Signature. The Debtor must approve of the information defining this assignment. For this task, he or she must sign and date this document upon satisfactory review. The Debtor should attend the first line presented in the signature area by signing his or her name on it.

(13) Debtor Signature Date.

(14) Debtor Printed Name.

(15)Assuming Party Signature. The Assuming Party must submit his or her signature to participate in this contract. 

(16) Signature Date Of Assuming Party. The date when the Assuming Party signed this agreement must be noted.

(17) Printed Name Of Assuming Party.

(18) Creditor Signature And Date. In order for the Creditor to approve of this agreement, he or she must sign it or a Signature Representative appointed by the Creditor must supply this approving signature.

(19) Creditor Signature Date. Upon the signing, the Creditor’s Signature Party must define the current date.

(20) Printed Name Of Creditor. The printed name of the Creditor’s Signature Party is expected.