Concept of Debt Transfer
Debt transfer in Lithuania refers to a situation where a third party, under a contract with the creditor, assumes the obligations and rights of the debtor.
There are two possible ways to transfer a debt:
- Transfer based on an agreement between the creditor and the new debtor;
- Transfer based on an agreement between the debtor and the debt transferee.
The debt transfer agreement must be in written form. However, the absence of a written form does not automatically render the agreement invalid. In such cases, the burden of proof lies in demonstrating that such an agreement was concluded.
Debt transfer is not allowed when prohibited by law, contract, or when the obligation is inseparably linked to the debtor (e.g., maintenance obligations, obligations related to personal services, etc.).
In the Republic of Lithuania, the creditor and a third party may enter into a debt transfer agreement by which the third party assumes the debtor’s rights and obligations. The third party then becomes the new debtor. Once the third party assumes the debt, the obligation between the creditor and the original debtor is terminated. In this case, the original debtor’s consent is not required.
When the debt is transferred based on an agreement between the debtor and the debt transferee, the creditor’s consent is mandatory. Without such consent, the debt transfer is not valid. The debtor and the transferee may set a time limit within which the creditor may express consent. If the creditor does not respond within this time limit, it is considered that the consent was not granted. The creditor’s consent for the transfer may also be pre-established in the agreement between the creditor and the debtor. Without the creditor’s consent, the original debtor remains liable. The agreement between the debtor and the transferee exists, but its entry into force is postponed until the creditor agrees.
In case of the creditor’s silence, the debt-assuming party may offer the creditor to fulfill the obligation. Even without an explicit statement of consent or refusal, the creditor may accept the performance from the new debtor, which constitutes implied consent to the transfer and removes the original debtor from the obligation.
Once the debt is transferred with the creditor’s consent, the new debtor in Lithuania may defend against claims using substantially the same objections that the original debtor had. However, the new debtor may not rely on defenses personal to the original debtor, demand the set-off of claims belonging to the original debtor, or raise objections based on internal relations between the original and the new debtor.