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If you have customers who are chronically late because they can't collect on time from third parties, you may want to consider using assignments to get payments directly from those third parties. This stops the funds from going through the debtor and prevents the debtor from being tempted to use the funds to pay someone else.
"Ordinarily, assignments for the payment of money are valid, even without the consent of the third party," says Stanley Turk, formerly an attorney with the law firm of Smith, Somerville & Case (Baltimore, Md.), and now an assistant attorney general for the State of Maryland, who frequently represented owners, developers, contractors, and design professionals in the recovery of accounts receivable.
"An assignment is not valid if it materially changes the risk or obligations of the third party, or violates public policy," he says. "In some cases, however, even if a contract prohibits assignments, the assignment may be valid anyway."
For more details on this particular form, please read our article "Getting Paid Through Assignments.
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