When can a creditor sell a debt under the law?


One of the possibilities of recovering debts from debtors, apart from the classic amicable debt collection, and also in court, is to sell the debt and get rid of the troublesome debtor. However, can all receivables be sold? When can a creditor sell a debt?

As a rule, the answer is yes. It should be inferred from the principle of freedom of contract that all receivables may be traded within the limits of the law. This is also stated in Art. 509 of the Civil Code:"the creditor may, without the consent of the debtor, transfer the claim to a third party (transfer), unless this would be contrary to the law, the contractual reservation or the nature of the obligation." The prerequisites for the effectiveness of the assignment of receivables (including the agreement for the sale of receivables) do not raise any doubts. However, if you want to sell your receivables, you should remember which types of receivables are excluded from legal transactions by law.There are three categories of such restrictions: statutory, contractual, and liability-related.

When can a creditor sell a debt? - statutory restrictions

The most common example of non-transferable claims are claims resulting from an employment relationship, which results from Art. 84 of the Labor Code (including remuneration for work, commissions, etc.). In addition, a significant group of such claims are rights that are not transferable under the Act, inter alia, the right to repurchase (Civil Code Art.595), the right of pre-emption (Civil Code Art.602), personal easements (Civil Code Art.300), or the right to life imprisonment (Civil Code Art.912). To non-transferable under Art. 449 of the Civil Code also includes claims for personal injury set out in Art. 444-448 of the Civil Code, except for those that: are already required and that have been recognized in writing or granted by a final judgment.

When can a creditor sell a debt? - contractual restrictions

They result directly from the legal relationship between the creditor and the debtor. Most often it takes the form of a clause excluding the possibility of making a transfer of receivables resulting from the contract. In this case, it is necessary to point to Art. 514 of the Civil Code, which deals with the case of an assignment agreement without the consent of the debtor: "If the claim is confirmed in a letter, the contractual reservation that the transfer cannot be made without the consent of the debtor is effective against the buyer only if the letter contains a note of this reservation, unless the buyer knew about the reservation at the time of the transfer."

Limitations resulting from the nature of the obligation

In the case of some legal relationships, it is essential that the performance resulting therefrom be fulfilled for the benefit of a specific person. In these cases, this specific subjective binding is excluded under Art. 58 of the Civil Code the possibility of assigning receivables. Such relations include, first of all, the maintenance obligation or the right to a pension (Article 903 of the Civil Code). Conclusion of an assignment contract that would contradict the liability is invalid.