Debt Purchase or Reassignment of the Debt
When a debt is reassigned prior to administration of the Debt Agreement you would just remove the existing debt and enter a new one either manually or via the CSV import method. See Accepted Debt Agreement Setup - Importing Creditors
To reassign a debt within the term of the administration you would:
- Add the new creditor and debt, either via import (see above link) or manually:
- The new debt will need to have the the same admitted balance as the original debt started with. For example, if Creditor A had an admitted balance of $8000, and $1000 in Dividends had been paid during the administration, then the new assignment/Debt Purchaser A would also have an admitted balance of $8000.
- You now need to create the Dividend records for the reassigned debt. Open the Distributions effected noting that this step is only valid if Dividends have been paid already. Then go to the Participants and Advice Printing.
- Right click the effected debt distributions and click show Distribution Entry and you'll now be able to see the entry for the original debt.
- Zero out the Net amount allocated to the original debt and add a new line allocating the prior dividends to new debt and creditor you have created. Click Save and Exit once done.
- You can now proceed back into Unsecured Creditor to open the original debt. Under the Proof of Debt tab, type Debt Sale under under Reason for Rejection and zero out the Total Admitted Balance.
*Note* Under Claim tab, use the field Memo/Notes on Claim to leave detailed notes such details of the reassignment as this is a current reporting field.
- Your unsecured creditor view will still display the original debt but will no longer calculate dividends for it. It is possible to create a new Claim Account, such as Reassigned Debts or Sold Debts, and assign the old debt so that it is filtered out of this view.
- You can now proceed to pay dividends as per the standard process.
- A record of this change, aside from file notes and the audit trail, always exists in your Unsecured Creditor Control account and Cash at Bank account. The Dividends updated during this process are still allocated to the original creditor for audit, tracking and reporting purposes. This not a process for refunds or to re-allocate dividends where funds were incorrectly paid.
- Repeat this process for each effected debt.