Executive summary

Yes, but only in a very limited sense. You can engage a collection agency to chase payment without a written contract (that’s mere agency).
But if you mean a true transfer (“assignment”) of the debt, so the agency becomes the new creditor and can collect in its own name, Philippine law expects writing—both because of the Statute of Frauds and the Civil Code rules on assignments.
No debtor consent is required for an assignment, but notice to the debtor is essential to bind the debtor and prevent good-faith payment to the old creditor.
Data privacy and consumer-protection rules also apply when you hand debtor information to third-party collectors.

Below is the full treatment.

I. Two different arrangements people call “turning an account over for collection”

Referral/outsourcing (agency).
- The original creditor remains the creditor.
- The collection firm acts as your agent to demand, negotiate, and receive payments for you, usually for a fee or success commission.
- Authority can be oral, though written terms are commercially prudent. If the agent will compromise, waive, or settle claims, a special power of attorney (SPA) in writing is typically required under the Civil Code provisions on agency.
Assignment/sale of credit (cession).
- You transfer the credit itself (the “thing in action”) to the agency or a debt buyer.
- After assignment, the agency owns the claim and can collect or sue in its own name.
- This is a disposition of a credit and engages statutory formalities (see Section III).

Understanding which of these you intend is critical; the legal requirements differ.

II. Is a written contract required?

A. For agency-only referrals

Not strictly required by law for basic collection efforts.
However, written authority becomes necessary when the agent will perform acts that the Civil Code treats as needing special authority (e.g., entering binding settlements, waiving rights, accepting something other than money in satisfaction, or assigning the claim again).
In practice, creditors use written engagement letters plus, where needed, an SPA defining the agent’s powers and limits (compromise thresholds, acceptable payment modes, handling of post-dated checks, etc.).

B. For a true assignment of credit

While an assignment may be perfected by consent, two legal regimes make writing functionally indispensable:
1. Statute of Frauds. An agreement for the transfer of a “thing in action” (a credit) for a value typically must be in writing to be enforceable if it remains executory. Even aside from the monetary threshold historically stated in jurisprudence, courts expect a written deed of assignment to prove the transfer.
2. Effect against third persons & proof. Under the Civil Code on assignment of credits:
  - The assignment does not prejudice third persons unless it appears in an instrument in writing (ideally a public instrument).
  - In litigation or when enforcing against the debtor, courts require the assignee to show title—usually by presenting the Deed of Assignment (and any chain of assignments if there were prior transfers).
  - Without such writing, the debtor can refuse to pay the supposed assignee, and any suit risks dismissal for lack of cause of action or for failure to prove real party-in-interest status.

Bottom line: If you want the agency to own the debt or to sue in its own name, prepare and execute a written Deed of Assignment.

III. Debtor consent and notice

Debtor consent is not required. Credits are generally assignable unless expressly prohibited by law, by nature, or by non-assignment clauses in the original contract.
Notice to the debtor is, however, crucial:
- Until the debtor has actual knowledge of the assignment, a payment made in good faith to the original creditor validly discharges the debtor.
- After notice, the debtor must pay the assignee and may set up against the assignee any defenses available against the original creditor before notice (e.g., compensation/set-off, invalidity, lack of consideration).

Practical rule: Send written Assignment Notices (with proof of service) and make sure payment instructions and bank accounts are updated and consistent.

IV. What exactly must be in the assignment document?

A solid Deed of Assignment typically states:

Parties (assignor creditor, assignee agency/buyer) and consideration (price or arrangement).
Precise identification of the receivable(s): debtor name, contract or invoice numbers, amounts, due dates, interest and penalty provisions, and any security (guaranty, pledge, mortgage).
Representations and warranties on existence/validity of the credit, absence of prior assignments or liens, and accuracy of schedules.
Extent of transfer: principal, accrued interest, penalties, and ancillary rights (e.g., to sue, to collect attorney’s fees).
With-recourse or without-recourse terms, repurchase triggers, and risk allocation (e.g., disputes, insolvency).
Delivery of documents: original contracts, statements of account, ledgers, demand letters, copies of IDs/Know-Your-Customer files if lawfully shareable, and any negotiable instruments.
Governing law, venue, and dispute resolution.
Execution form: signed by authorized officers; notarization recommended (often required by institutional buyers and courts for evidentiary weight).

V. Data privacy and information-sharing

When you hand over debtor data:

The Data Privacy Act (DPA) applies. A collection firm engaged purely to act on your behalf is commonly treated as a personal information processor; if it buys the receivables, it becomes a separate controller.
For outsourcing (processor): have a written Outsourcing/Processing Agreement covering purpose, scope, security, retention, breach handling, and no use beyond collection.
For data sharing between controllers (e.g., outright assignment): document the lawful basis (contract necessity, legitimate interests, or establishment/exercise of legal claims), execute a Data Sharing Agreement, and give privacy notices as required.
Share only what is necessary and proportionate; avoid excessive or non-pertinent data.
Ensure the agency uses lawful, non-harassing methods and has safeguards for call recordings, SMS/email templates, and third-country transfers if any.

VI. Consumer-protection and conduct rules

Regardless of agency or assignment:

No intimidation, violence, threats, or shaming (e.g., posting on social media, contacting employers or unrelated contacts).
Contact hours should be reasonable; repeated, disruptive calls can constitute harassment.
No false representation (e.g., pretending to be law enforcement, threatening arrest or baseless criminal charges).
Maintain accurate balances; promptly reflect payments and reverse erroneous charges.
Keep a clear complaints process and escalation path.

Sector-specific regulators (e.g., BSP for banks, SEC for financing/lending companies) have circulars and memoranda that spell out unfair collection practices—collection partners must comply with those as a condition of your own compliance.

VII. Litigation and enforcement realities

If a case reaches court or arbitration:

An assignee must prove title via the Deed of Assignment and the chain of custody of the credit; bare demand letters are not enough.
The debtor can raise real defenses (e.g., payment, invalidity, extinguishment) and equitable set-off that existed before notice of assignment.
Evidence packages matter: certified copies of the original contract, statements of account, notice of assignment with proof of service, and proof of computations (interest/penalties) are frequently decisive.

VIII. Taxes & fees (high-level only)

Parties should evaluate potential Documentary Stamp Tax and income/VAT implications depending on structure (with-recourse vs. without-recourse, discounting vs. service fee). Seek tax advice tailored to the transaction; treatment can vary with facts.

IX. Common pitfalls (and how to avoid them)

Thinking “verbal is fine” for assignments. It isn’t, practically or evidentially. Use a written, notarized deed.
Skipping debtor notice. You risk releasing the debtor if they pay the original creditor in good faith.
Vague schedules. Ambiguous receivable lists lead to disputes on what was actually sold or placed.
Over-sharing data. Share only necessary personal data under a proper legal basis and agreement.
Letting agents “settle” without SPA. If the agent compromises claims without written special authority, you can end up bound—or in a dispute with the debtor—against your intentions.
Non-assignment clauses. Check the underlying contract; breaching one can trigger default or damages.

X. Practical checklists

A. If you just want an agency referral

Engagement letter (scope, fees, do’s/don’ts).
SPA (if allowing compromises, waivers, or settlements).
Data processing/outsourcing terms under the DPA.
Standardized, compliant demand templates and call scripts.
Clear remittance and reconciliation procedures.

B. If you want a true assignment

Deed of Assignment (preferably notarized) with schedules of receivables.
Delivery of supporting documents and records.
Debtor Notices with acknowledgment or proof of service.
Data-sharing documentation and updated privacy notices.
Internal ledger updates; lock old payment channels.

XI. Short answers to the most asked questions

Q: Can I assign a debt to a collection agency without a written contract? A: You can hire a collection agency without writing (though writing is wise). But to assign the debt so it becomes theirs, treat a written deed as mandatory in practice.
Q: Do I need the debtor’s consent to assign? A: No. But notify the debtor; otherwise payment to you may discharge the debtor.
Q: Can the agency sue the debtor if we didn’t sign a deed? A: No. Without a written assignment proving title, the agency is not the real party in interest.
Q: Are there privacy issues in handing files to a collector? A: Yes. Use the correct processing or data-sharing agreement, limit data to what’s necessary, and ensure lawful, non-harassing practices.

Disclaimer

This is general information for the Philippine legal context and not legal advice. Specific facts (contract clauses, account history, securities, sector regulations, and tax posture) can change outcomes. For a live transaction or dispute, consult Philippine counsel and your compliance team.