Debtor’s Defenses

When a note or obligation assignable by law is transferred to an assignee, s/he is invested with a legal right to the obligation.  S/he may proceed immediately after the note or obligation is due, to use legal means for the collection of the debt.  If the assignee fails having used due diligence, s/he may rest upon the right to collect the amount of the judgment at a future time from the obligor.  By his/her refusal to take recourse on the assignor upon the assignment, and by looking to the future ability of the obligor to make payment, the assignee incontestably manifests the continued existence of a valid consideration for the assignment.[i]

An assignee takes precisely what the assignor had, and assumes not only all advantages but is subject to the same defenses. Thus, the obligor can assert against the assignee all claims that would have been available against the assignor.[ii]

[i] Wood v. Berthoud, 27 Ky. 303 (Ky. 1830)

[ii] Smith v. Brown, 513 N.W.2d 732 (Iowa 1994)

Inside Debtor’s Defenses