What is a joint and several liabilities and what does it mean?

This is when two individuals take out a “joint debt” together, and both people sign the credit agreement, they enter into a ‘Joint and Several Liability‘ agreement.

Joint and Several liability provides the creditor with the assurance that each of the signatories will be held fully liable for the outstanding debt in the event that one of the signatories is unable or unwilling to continue making the scheduled debt repayments. Joint and Several liability agreements can be any type of credit agreement, and they can also be secured or unsecured, but the most common occurrences would include mortgages, joint bank accounts and joint bank loans.

Other examples of Joint and Several Liability credit agreements would include tenancy agreements, Council Tax and secured loans taken out on jointly owned properties.

Joint and Several Liability only applies to debts which have been taken out by more than one signatory, and does not necessarily include agreements where there are two card holders for say a credit card.

In the vast majority of cases, Joint and Several liability agreements are repaid without any problems, therefore never really creating an issue.

In the event that a Joint and Several debt cannot be maintained, the creditor reserves the right to chase each or both debtors independently for the full repayment of the loan.

Both signatories are fully liable for the total outstanding balance.

In the event that one signatory refuses to repay – the full responsibility of the debt falls on the other signatory.

Best Wishes, Susan.

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