Limits of Collection Authority in an Action to Avoid Transactions

Legal Article · 12 November 2026
Av. Thomas Andreas Di Constantinople

An action to avoid transactions aims to give a creditor compulsory enforcement authority over the value concerned by particular debtor transactions that impede collection. It is not invariably an ownership action invalidating the transaction against everyone. Its consequences are generally linked to the enforcement claim and statutory limits.

Articles 277 et seq. of the Enforcement and Bankruptcy Law regulate transactions susceptible to avoidance and the action's conditions. The claim's nature, enforcement and inability-to-pay status, and the transaction's temporal relationship must be examined together. Transfer of an asset by the debtor alone is not considered sufficient for avoidance.

Gifts, overindebtedness, and prejudice to creditors are different avoidance grounds. Article 278, amended by Law No. 7571, uses a one-year period before the relevant certificate of inability to pay, attachment record, or bankruptcy date for gifts and gratuitous dispositions other than customary gifts. Rebuttable rules apply to transactions between specified relatives and contracts involving inadequate consideration. These do not produce definitive and automatic avoidance of every transaction.

The third party's position in the transaction, their knowledge, and subsequent transfers matter. Disposal of the asset may change the subject of the judgment and scope of liability. The period for bringing the action and the look-back periods concerning particular transactions must also be assessed separately.

For example, an avoidance judgment concerning transfer of immovable property does not invariably result in its registration directly in the debtor's name. It may confer on the creditor authority to attach and sell the property. Claims for title cancellation and registration, simulation, and transaction avoidance must therefore be distinguished by their legal bases and operative consequences.

This article has been prepared for general legal information purposes.