Legal advice to save money on your loan if your bank has transferred the debt to a third party.

If you have a mortgage or a personal loan with a bank and have had problems making the payments, it is possible that your bank will have sold your credit to a third party, otherwise known as a vulture fund.

Normally the bank performs these assignments when it understands that the credit is a risky one, or will be difficult to collect. They are normally massive assignments (i.e: many loans are transferred together), and sold for a much smaller amount than the amount actually due on the loan.

Generally, this assignment is often bad news for the debtor because these funds are held by specialist companies with great experience in debt collection, they are usually more aggressive in negotiating, claiming, they are more difficult to reach when you need to contact them, and they often refuse to put the proposed agreements in writing, etc.

Occasionally however, these assignments by the bank can present very favorable and positive consequences for the debtor, because legally, provided that certain requirements are met, the debtors may be able to extinguish their debt by paying the assignee (new owner of the credit), the amount paid for the debt by the new compan to the bank, which will usually be much lower than the money actually owed, plus interest and costs.

Thus, Article 1535 of the Spanish Civil Code states that:

“If a litigious credit is sold, the debtor has the right to extinguish it, reimbursing the assignee the price paid, the costs caused and interests of the price from the day it was paid.

It shall be considered a litigious credit since the  claim is answered.

The debtor may use their right within nine days from the time when the assignee claims for the  payment.


For the debtor to be able to exercise this right of “re-purchase ” and extinguish the debt, it must be a litigious credit – debt, ie,one were there is no agreement in place, and the debtor must have presented opposition to the claim. There is a very short time window for action however,  only 9 days.

It is true that these strict requirements have been somewhat relaxed by some judges and courts in Spain, but they are still not easy to meet.

Therefore, if you have a debt with a bank, and you have been informed that the debt has been transferred to a third party, it is possible you could be released from the debt by paying the new creditor what they paid in acquiring it.  This would normally be much less than the  amount owed to the original creditor. Although the requirements to benefit from this legal possibility are difficult to fulfill, it is worth checking to see if it is a possibility, because the money to be saved can be significant.

If you need legal assistance regarding this issue, contact us and we will help you.


The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.

Carlos Baos (Lawyer)

Spanish solicitor -barrister.

Alicante, Denia, Costa Blanca Marina Alta

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