Behind every debt sale there is a long-established legal concept recognised throughout Canada: the assignment of debt. Understanding it is key for both sellers and buyers.
Definition and legal framework
An assignment of debt is the transaction by which the original creditor (the assignor) transfers to a third party (the assignee) the right to collect from the debtor. Common-law provinces recognise both legal and equitable assignments, and provincial statutes such as Ontario's Conveyancing and Law of Property Act set out the requirements for an absolute assignment. In Quebec, the equivalent is the assignment of claim under the Civil Code.
Does the debtor have to consent?
No. This is the most frequent question. A debt can generally be assigned without the debtor's consent, unless the underlying contract expressly prohibits it. However, the assignment must be notified to the debtor in writing through a notice of assignment: until they receive it, any payment made to the original creditor validly discharges the debt.
The debtor keeps all their rights intact: they can raise against the new creditor the same defences they had against the original one, and the terms of the debt do not get worse because of the assignment.
What is transferred with the debt?
Unless agreed otherwise, the assignment carries the principal debt and its accessories: contractual interest, guarantees and enforcement rights. That is why debts with a judgment or with security are valued higher.
Is the seller liable if the debtor does not pay?
As a general rule the assignor warrants that the debt exists and is legitimate at the time of sale, but does not guarantee the debtor's solvency, unless expressly agreed. The buyer takes on the collection risk — which is precisely why they pay a discounted price. You can review general federal statutes at laws-lois.justice.gc.ca.
How Debtalia fits in
Debtalia is a marketplace that connects sellers and buyers directly; it does not buy debt itself and takes no commission on the sale. Listings are anonymous, and the assignment is signed directly between the two parties once they agree the price.
Assignment in practice
In practice the process is simple: agree the price, sign the assignment agreement with the debt documentation annexed, pay the price and serve the notice of assignment on the debtor. Debtalia connects the two sides so they can close the deal directly and confidentially.
