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Notice of Transfer of Claim

Even though creditors rights are limited by the automatic stay provisions of Chapter 13, you will find that debt buyers continue to buy and sell accounts. Large credit card lenders will often “sell paper” - the accounts receiveables for accounts in bankruptcy to third party debt buyers like B-Line or Roundup Funding.

Often these debt buyers purchase credit card or other accounts that are in bankruptcy for pennies on the dollar. For example, if you owe Citibank $3,500 and your Chapter 13 plan calls for a payment to unsecured creditors at 50%, the value of your account is $1,750 less a risk factor. A debt buyer may purchase this account for $250 and assume the risk of non-payment and administrative costs. If you successfully complete your plan, the debt buyer will make a nice profit.

Debt buyers do not purchase individual accounts - they buy pools of accounts receiveables. If your account happens to be in this pool, the debt buyer will file a notice with the Clerk of Court to document its ownership of this account.

Transfers of account ownership like this is perfectly acceptable as long as the debt buyer abides by the automatic stay provisions of the bankruptcy law and the terms of your confirmed Chapter 13 plan.

Here is an example of a notice that was filed in one of my client’s cases. In this situation, one debt buyer (B-Line) is selling a pool of receiveables to another debt buyer (Roundup Funding). My client received this notice and called because she did not know what this all meant. Now you know.

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