… you have granted a loan and the borrower assigns claims to you as security for repayment
… you have taken out a loan and must assign claims to the lender to secure the repayment
Under this agreement regarding the assignment of claims, a borrower assigns claims to a lender to secure a loan. The assigned claims are used as a collateral until full repayment.
The parties can choose to assign certain defined claims (for instance, claims against insurance companies) or all of the lender’s current and future claims.
If the borrower is in default for payments under the loan (for instance, it has failed to pay the interest when due), the lender may enforce the claims against the assigned debtors and request that all payments will be made to it until it has received the loan amount and interest due. The assigned claims thus allow the lender to recover (at least part of) its losses and serves to mitigate the credit risk of the borrower.
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