A debtor is an individual or entity that owes money to another party. This can include individuals filing for bankruptcy or against whom bankruptcy is filed. In secured transactions, a debtor can also be someone with a property interest in collateral or a seller of certain types of financial instruments. There are various types of debtors, including absent debtors who are beyond the reach of service of process, joint debtors who are jointly liable for a debt, and new debtors who become bound by a security agreement previously entered into by someone else. A solvent debtor is someone who owns enough property to cover all their debts and against whom a creditor can enforce a judgement.
A new debtor refers to an individual who assumes the role of a debtor in a security agreement that was previously established by another person. Generally, a debtor is someone who has an obligation to repay a debt, particularly a monetary one. For instance, John borrows money from a bank and offers his car as collateral. Later on, he sells the car to Jane, who agrees to assume the loan payments and become the new debtor. In another scenario, Tom and Jerry are both responsible for a credit card account. When Tom passes away, his estate becomes a new debtor and is accountable for paying his portion of the debt. These examples demonstrate how an individual can become a new debtor by taking over someone else’s debt or by inheriting debt following someone’s demise.
No, a new debtor is not responsible for the debts incurred by a previous owner unless they have explicitly assumed those debts.
The legal obligations of a new debtor include making timely payments on any debts they have assumed, complying with the terms and conditions of any loan agreements, and maintaining accurate financial records.
Generally, a new debtor cannot be sued for the debts of a previous owner unless they have assumed those debts or there is a legal basis for holding them responsible, such as fraudulent transfer of assets.
Yes, a new debtor can negotiate new terms for existing debts with the creditor, but it is subject to the creditor’s willingness to agree to such changes.
Generally, a new debtor cannot be held liable for the actions of a previous owner unless they have assumed those liabilities or there is a legal basis for holding them responsible, such as fraudulent activities.
No, a new debtor cannot be forced to pay off the debts of a previous owner unless they have explicitly assumed those debts or there is a legal basis for holding them responsible, such as fraudulent conveyance.
In certain circumstances, a new debtor may be held responsible for tax liabilities of a previous owner if they have assumed those liabilities or if there is a legal basis for holding them responsible, such as fraudulent tax evasion.
Generally, a new debtor cannot be held responsible for the debts of a dissolved business entity unless they have explicitly assumed those debts or there is a legal basis for holding them responsible, such as fraudulent transfer of assets.
No, a new debtor cannot be held responsible for the debts of a deceased individual unless they have explicitly assumed those debts or there is a legal basis for holding them responsible, such as fraudulent transfer of assets.
A new debtor may be held responsible for the debts of a co-debtor if they have jointly assumed those debts or if there is a legal basis for holding them responsible, such as fraudulent activities or breach of contract.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/new-debtor/
- Modern Language Association (MLA):New Debtor. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/new-debtor/.
- Chicago Manual of Style (CMS):New Debtor. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/new-debtor/ (accessed: May 09 2024).
- American Psychological Association (APA):New Debtor. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/new-debtor/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts