Short answer. Not without the creditor's consent. Article 1293 provides that novation substituting a new debtor may be made even without the knowledge or against the will of the original debtor, but not without the consent of the creditor. Your private arrangement with your brother does not bind the lender.

What the law says

Novation which consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor.

Civil Code, Article 1293 — Substitution of Debtor. Read the full provision →

Whose agreement is indispensable

Article 1293 is precise about this: Novation which consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor. Note the asymmetry. Your own consent can be dispensed with; the lender's cannot. A creditor extended credit to a particular person after assessing that person's means and reliability, and nobody may swap that person for another behind his back. So the agreement that matters is not the one between you and your brother — it is the one you need from the bank.

What the private arrangement does achieve

It is not worthless. Your brother becomes obliged to you to pay, and if he pays the lender, Article 1293 gives him the rights mentioned in Articles 1236 and 1237 — he may demand from you what he paid, though a payer acting without the debtor's knowledge or against his will recovers only insofar as the payment benefited the debtor, and he cannot compel the creditor to subrogate him in rights arising from a mortgage, guaranty or penalty. What the arrangement does not do is remove your name from the loan. Until the lender releases you, a default is still recorded against you and still collectible from you.

Getting a real substitution

There are two shapes this takes. The new debtor may step forward on his own initiative, which is why the article allows substitution even without the original debtor's knowledge. Or the original debtor may propose him and the creditor accept — the ordinary route where a borrower asks a lender to transfer the loan to a relative. Either way, Article 1292 still governs the effect: your release has to be declared in unequivocal terms or the two obligations must be incompatible on every point. A lender's letter merely acknowledging that your brother will be paying is not a release, however encouraging it sounds.

Who carries the risk afterwards

The route taken decides what happens if your brother later cannot pay. Article 1294 provides that where the substitution was without the knowledge or against the will of the original debtor, the new debtor's insolvency or non-fulfilment gives rise to no liability on the original debtor's part. Article 1295 addresses the other route: the insolvency of a new debtor proposed by the original debtor and accepted by the creditor does not revive the action against the original obligor, except where that insolvency already existed and was of public knowledge, or was known to him, when he delegated the debt.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

Related provisions

Note. Statute text quoted on this page is reproduced from the official enactment and is linked to the full provision. The explanation around it is general legal information from Vivas & Nobles Law Office, not legal advice. Whether it applies to your situation depends on facts only a lawyer reviewing them can assess.