Borrowing – joint and several liability for loans and debts

Borrowing money together with another person and jointly guaranteeing a loan also means that you are each separately jointly and severally liable for the loan. What exactly does joint and several liability for loans and debts mean? What should you pay attention to in case of joint and several liability? Who exactly is liable for the loan and the debts incurred? Also pay attention to the consequences of being a guarantor and guarantee if someone is going to borrow money somewhere with your help and backup.

What is joint and several liability?

and several liability exists if you or several people with whom you have a specific relationship can be personally held liable for the payment of a loan or debts. With a mortgage, for example, joint and several liability must almost always be signed if the mortgage deed is signed by more than one person. You remain jointly and severally liable until the bank releases you from this liability.

Release from joint and several liability is not that simple

Because a bank is not obliged to release you from this liability, you must request the bank in writing to release you from joint and several liability. A good example is a divorce or the situation in which you leave a company in which you took out a joint loan together with your former partners. Never allow yourself to be silenced by the verbal agreement that the ex-partner or ex-partners will pay the debts. If they do not or cannot keep their word, while you are jointly and severally liable, the bank will still knock on your door. In short: put the agreement in writing, preferably with the notary, and release yourself from liability. Black on white. On the other hand, you can never be jointly and severally liable if you never co-signed for the loan or mortgage in question.

Jointly and severally liable and right of recourse

The right of recourse is the right to reclaim what you have paid for someone else who is liable. Also in case of joint and several liability. So suppose that you are held jointly and severally liable for non-payment of debts by a co-signer of the debt or loan, then by paying the debts you also have the right to recover this debt from the co-debtor. The right of recourse is often found in insurance if the insurer compensates the damage and thus has recourse against the person who caused the damage. The person who caused the damage can then insure this recourse by being insured himself.

Types of loans

There are many types of loans, the best known of which are:

  • The personal loan, pl.
  • The revolving credit
  • Overdrawn at the bank.
  • Mortgages.

Of course, it is always wise to look for cheap loans and the best types of loans in our country.

Prenuptial agreements for loans and debts

The liability you have for a partner with whom you live or are married is of course also determined by the way in which you have arranged your partnership. If you are married under a prenuptial agreement and have therefore completely excluded mixing with the other person’s property, you are not liable if you have not co-signed for the loan. If a cohabitation contract states that everyone is responsible for their own debts, and the debts incurred are not joint, then you are not liable for them. The same applies to a LAT relationship and other forms of partnership. If you are married in community of property, each partner is jointly responsible and liable for a loan taken out. If you act as guarantor for someone else, you are also jointly and severally liable.

Buy out

If a private home is at stake in a divorce (an owner-occupied home), one partner may want to buy out the other for a certain amount. Please note that buying out your partner does not immediately mean that you are no longer jointly and severally liable for the debts (mortgage, pl, other debts). Only the lender or bank can release you from joint and several liability.

Conclusion of joint and several liability for loans and debts

Pay attention to the terms of the loan and know what it means if you co-sign or act as guarantor. Some people simply become guarantors because they think that guarantor for someone else is just a paper tiger. The opposite is true. Marco Borsato also once stood as guarantor for the company TEG, The Entertainment Group, and was therefore 100% jointly and severally liable.