WHat will happen if my husband and I had a small business with my sister and her husband but they declared bankruptcy?
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WHat will happen if my husband and I had a small business with my sister and her husband but they declared bankruptcy?
The business only lasted 3 years and went under. We still had a joint loan with our partners for $65,000. Our partners went bankrupt on the full amount. Can the bank still hold my husband and I for the full amount?
Asked on June 13, 2013 under Bankruptcy Law, California
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 10 years ago | Contributor
Unfortunately, the bank can still hold you liable. Just because your partners can no longger be held responsible for repayment doesn't relieve you and your husband of your obligation. The reason is something known as "joint and several liability". This means that if there are several parties to a contract and one or more cannot perform their legal obligations, then the other parties must bear full liability. The only way around this is if you and your husband also file for bankruptcy.
That having been said, it still may be worth your while to consult with an attorney and have them review all loan documents.
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