Short answer. Yes. Although a new debtor's later insolvency normally does not revive the creditor's claim against you, Article 1295 makes an exception. Where the insolvency was already existing and of public knowledge, or known to you, when you delegated the debt, the release does not protect you and the creditor may proceed against you again.
What the law says
shall not revive the action of the latter against the original obligor
Civil Code, Article 1295 — Insolvency in Delegacion. Read the full provision →
What the law says
except when said insolvency was already existing and of public knowledge, or known to the debtor
Civil Code, Article 1295 — Insolvency in Delegacion. Read the full provision →
The general rule protects you
When you persuade a creditor to release you by putting a new debtor in your place — a delegación — the creditor accepts that substitute as the person to look to for payment. Article 1295 starts from a rule in your favour: the insolvency of the new debtor, once he has been proposed by you and accepted by the creditor, shall not revive the action of the latter against the original obligor. In plain terms, if the substitute later runs out of money, that is ordinarily the creditor's loss, not yours. Having agreed to chase someone else, the creditor bears the risk that the replacement turns out unable to pay, and the release you obtained is generally final.
The exception that revives the claim
That protection is not absolute. The same article adds an exception: the release does not hold except when said insolvency was already existing and of public knowledge, or known to the debtor, at the time the debt was delegated. So the shield covers only insolvency that arose after the substitution. If the replacement was already insolvent when you proposed him, and that ruin was public knowledge or known to you, the creditor's original action against you revives. On the facts you describe — everyone knew the new debtor was already insolvent — you fall squarely inside the exception, and the creditor may pursue you again.
What counts as public knowledge or known to you
Either of two situations is enough on its own. The first is insolvency that was already existing and of public knowledge — an open, notorious inability to pay that a reasonable creditor could have found out. The second is insolvency known to the debtor, meaning known to you, the original obligor who proposed the substitute. The law will not let you shed a debt by handing the creditor someone you knew, or the public knew, could never pay. What matters is the state of affairs at the moment of delegation, not what happens to the new debtor's finances afterwards.
What the rule does not do
This provision reaches only a delegación the creditor actually accepted. It does not revive the debt by itself; it revives the creditor's action, so the creditor must still sue and prove both the substitution and the pre-existing, notorious or known insolvency. It does not touch a replacement whose insolvency genuinely came later, nor one whose earlier troubles were neither public nor known to you. And it does not turn you into a permanent guarantor of the substitute's solvency — outside this narrow exception, the risk of the new debtor's later failure stays with the creditor who agreed to accept him.