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FiveStarLaw
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Category: Bankruptcy Law
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Experience:  Bankruptcy Lawyer. Experienced.
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we went into business with a family member a few years ago.

Resolved Question:

we went into business with a family member a few years ago. we both put our homes up for collateral for the bank loan. the business failed. and the other party refuses to pay his part of the bank loan since he is planning to file bankruptcy. we do not intend to file for bankruptcy, and we intend to pay our half of the loan, but we wonder if we are required to pay the bank for his part also, can the bank foreclose on our home if his part is not paid...
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  FiveStarLaw replied 5 years ago.

Hello,

Thank you for your question. I am happy to assist you.

Typically a lender requires the borrowers to sign "jointly and severally". Joint and several liability means that the lender can collect the entire amount of the loan from either borrower.

Assuming the note was signed with joint and several liability, the lender can collect 100% of the monies owed from either borrower in the event of a default. If the lender were to collect 100% from you, your remedy would be to sue the other borrower for his share of the monies. However, if the other borrower has filed bankruptcy, the debt to yu would likely be discharged and thus uncollectible.

The terms of the note may require that the lender first execute on the collateral prior to taking additional collection action. However, this is not typical for a business loan collateralized by a home. You will want to consider reviewing this issue with local counsel.

I hope that the information which I provided was helpful to you. If so, please CLICK ACCEPT. After clicking ACCEPT, feel free to ask an additional question or request a clarification.

THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE

Bonuses and Positive Feedback gratefully accepted!

FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36409
Experience: Bankruptcy Lawyer. Experienced.
FiveStarLaw and 2 other Bankruptcy Law Specialists are ready to help you

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