Short answer. It depends on what you did when the debt was assigned. Article 1285 gives three answers: consent without reservation loses the set-off, mere notice preserves it for credits existing before the assignment, and an assignment you never learned of preserves more.

What the law says

If the creditor communicated the cession to him but the debtor did not consent thereto, the latter may set up the compensation of debts previous to the cession, but not of subsequent ones.

Civil Code, Article 1285 — Compensation and Assignment of Credit. Read the full provision →

What the law says

If the assignment is made without the knowledge of the debtor, he may set up the compensation of all credits prior to the same and also later ones until he had knowledge of the assignment.

Civil Code, Article 1285 — Compensation and Assignment of Credit. Read the full provision →

If you consented to the assignment

This is the strictest of the three positions. Article 1285 provides that the debtor who has consented to the assignment of rights made by a creditor in favour of a third person cannot set up against the assignee the compensation which would pertain to him against the assignor, unless the assignor was notified by the debtor at the time he gave his consent that he reserved his right to the compensation. Consent given without that reservation costs you the set-off entirely. Signing a consent form a lender puts in front of you, without a word about the money he owes you, is how this happens.

If you were only told

Notification is not consent, and the difference is worth money: If the creditor communicated the cession to him but the debtor did not consent thereto, the latter may set up the compensation of debts previous to the cession, but not of subsequent ones. So a letter announcing that your account has been transferred to a collection agency does not strip you of anything that had already accrued in your favour. What it does is close the window. Claims arising against the original creditor after that communication cannot be used against the assignee, which makes the date on the letter the line that matters.

If you were never told at all

The debtor kept in the dark is protected furthest: If the assignment is made without the knowledge of the debtor, he may set up the compensation of all credits prior to the same and also later ones until he had knowledge of the assignment. The cut-off moves from the date of the assignment to the date you actually learned of it, so credits that accrued in the interval are still available to you. An assignee who never bothered to inform you bears the consequence of his own silence, which is a considerable incentive on his side to give notice promptly.

Working out where you stand

Three dates decide the question: when the assignment was made, when you were told, and when each credit in your favour arose. Assemble the correspondence before replying to the collection agency, because the letters you write now can be read as consent to the transfer. Note also that the underlying claim still has to qualify for compensation at all — Article 1279 requires the debts to be due, liquidated and demandable, and Article 1290 makes the extinguishment automatic only where every requisite is met.

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.