If you are owed money through unpaid invoices, private loans or business dues, selling the debt is one of the fastest ways to recover part of your money without waiting years for recovery. In this guide we explain, step by step, how debt sales work in India.
What does selling a debt mean?
Selling a debt means assigning your right to collect it to a third party (the buyer or investor) for an agreed price, always below the face value. In Indian law this is an assignment of an actionable claim under section 130 of the Transfer of Property Act, 1882, executed in writing and effective once notice is given to the debtor.
The original creditor receives immediate payment and stops owning the receivable. From that moment the new owner is entitled to collect the ₹ amount from the debtor.
Step 1: check that your debt can be sold
- You must be the legitimate owner of the receivable.
- The debt must be due and payable, not still within its credit period.
- It must be a provable money debt: invoices, contracts, acknowledgements, decrees or dishonoured cheques.
Step 2: gather your documentation
The more paperwork you have, the more attractive your debt is: tax invoices with GST details, signed contracts and purchase orders, ledger confirmations, legal notices, dishonoured cheques and, of course, any decree or Debt Recovery Tribunal (DRT) order if you have already litigated.
Step 3: set a realistic sale price
The price depends on the age of the debt, the debtor's solvency and the available paperwork. As a rule we suggest a minimum discount of 20% on the face value so the deal is worthwhile for investors. Older or harder-to-collect debts need bigger discounts.
Step 4: list your debt where the buyers are
On Debtalia you can list your debt or portfolio in minutes. Debtalia is a marketplace that connects sellers directly with buyers and takes no commission on the sale. Your listing is anonymous, so investors, law firms and funds see the deal without seeing your identity.
Step 5: negotiate and sign the assignment
When an investor is interested they contact you directly. Once the price is agreed, a deed of assignment is signed, the buyer pays you, and the debtor is given written notice under section 130 so they know to pay the new creditor.
How long does it take?
Listing is immediate. How fast offers arrive depends on how attractive the price is and the type of debt: well-documented debts at fair discounts usually generate interest within days or weeks. You can check the framework of the Transfer of Property Act on India Code.
Conclusion
Selling a debt is a legal, safe and quick route to liquidity without the cost and uncertainty of court action. If you are owed money, don't write it off: put it up for sale.
