Can a creditor sell or assign a debt to a collection agency in Israel?

A debt is a property right, and under Section 1 of the Assignment of Obligations Law 5729-1969 a creditor may transfer that right to someone else by assignment (hamchaat chov). Consent of the debtor is not required, because the debtor's position is protected in other ways. The assignment can be an outright sale to a debt-purchasing company or a transfer for collection only. Section 2 preserves the debtor's defenses: the assignee takes the debt subject to the same objections, counterclaims, and set-offs the debtor could have raised against the original creditor. Assignment is barred only where the right is personal by its nature, where a statute prohibits it, or where the underlying contract validly restricts it.

For a foreign creditor holding an Israeli debt, selling or assigning it can be a fast way to realize value without running enforcement yourself, though buyers pay a discount that reflects collection risk. Two practical rules matter. First, notify the debtor of the assignment in writing: before notice, a payment the debtor makes to the original creditor discharges the debt, and the assignee cannot complain. Second, the assignee steps into your shoes and no further, so any weakness in the original claim passes with it. Collection agencies acting on assigned debts must also respect the conduct limits Israeli law places on debt collectors. Our debt collection guide for foreign creditors explains enforcement through the Execution Office.

From the full guide: Debt Collection in Israel: A Guide for Foreign Creditors

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