What is an assignment?

An assignment is the transfer of a claim from one person to another. In simple terms: Someone who is owed money by another person can pass on the right to collect that money to a third party. This process is also known as an assignment of claims.

The key point: The original claim remains unchanged in terms of its content. The only thing that changes is who is entitled to collect the money. For example, a company with an unpaid invoice can assign the claim to a debt collection agency. From that moment on, the agency has the right to collect the money from the debtor.

Assignments are legally permitted in Germany and widely used. They play an important role in claims management and debt collection, helping to recover outstanding payments more quickly and efficiently.

Who is involved in an assignment?

An assignment always involves three parties, each with a clear role:

Assignor: This is the original creditor – either a person or a company – who owns the claim and transfers it to someone else.
Assignee: This is the new creditor who receives the claim and now has the right to collect the money from the debtor.
Debtor: The person or company who originally owed the money.

Even after the claim has been assigned, the debtor is still required to pay the outstanding amount. However, what can change is who the debtor has to pay. That depends on how the assignment is carried out.

What is an assignment used for in debt collection?

In debt collection, an assignment is used to allow a collection agency to handle an outstanding claim in its own name. This is an important distinction. Once the agency has received the claim through an assignment, it is no longer acting merely on behalf of the original creditor – it becomes the new creditor.

This offers advantages for both sides:

The original creditor no longer has to deal with reminders or legal proceedings.
The debt collection agency can act directly, efficiently, and within a clear legal framework – for example, by requesting a dunning notice or negotiating with the debtor.
For debtors, it is clear that the debt collection agency is now the main point of contact.

Assignments are particularly useful in cases involving large volumes of similar claims, such as for e-commerce companies or service providers with many customers.

How does an assignment work?

An assignment usually follows several steps, which are typically documented in writing. The process looks like this:

The original creditor (assignor) decides to transfer a claim to a new creditor (assignee).
An assignment agreement is signed between the two parties. This agreement defines which claim is being transferred and under what conditions.
Once the contract is signed, the claim legally transfers to the assignee.
Depending on the type of assignment, the debtor is either informed or not informed about who must now be paid.

From the moment the assignment takes effect, only the new creditor is entitled to assert the claim. For the debtor, it is important to know exactly who is entitled to receive payment to avoid making duplicate payments.

What types of assignment are there?

There are two main types of assignment, which differ in whether the debtor is notified of the transfer or not:

Open assignment

In an open assignment, the debtor is explicitly informed. They receive a notice that the claim has been assigned – for example, to a debt collection agency. From that point onward, the debtor may only pay the new creditor. Open assignments provide transparency and are commonly used in debt collection.

Silent assignment

In a silent assignment, the debtor is not informed of the transfer. They continue paying the original creditor, who then forwards the money internally to the assignee. This method is often used in internal claim financing or by banks but plays a more minor role in traditional debt collection.

Where is the assignment governed by law?

The legal basis for the assignment of claims is found in the German Civil Code (BGB). The following sections are particularly relevant:

Section 398 BGB: This is the core provision. It states that a claim can be transferred from one creditor to another by contract.
Section 399 BGB: This section outlines when an assignment is not permitted – for example, if a contract explicitly forbids it.
Section 401 BGB: This part explains which documents and securities are also transferred along with the claim.

These legal regulations ensure that an assignment is legally valid and transparent – for both creditors and debtors.