If I assumed responsibility for a debt incurred with a former business partner, should the bank recognize our agreement?

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If I assumed responsibility for a debt incurred with a former business partner, should the bank recognize our agreement?

My business partner and I had a line of credit secured by personal guarantee with the bank when we opened our business 6 years ago. Then 2 years ago I signed an agreement taking over the company and the debt. It was notorized. Last year I had to declare personal bankruptcy which wiped out my responsibility for the debt. Can the bank still go after my ex-partner even though I assumed responsibility?

Asked on January 8, 2012 under Bankruptcy Law, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, the bank can still seek payment on the obligation that your former partner agreed to undertake regardless of the fact that you assumed your partner's debt and eventually filed for bankruptcy protection.

The reason why the bank can still deem your former partner responsible for the debt he or she incurred is that the bank never signed a written release as to your former business partner's obligation with respect to this debt that you at one point in time agreed to take over.


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