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Simple English definitions for legal terms
new debtor
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A quick definition of new debtor:
A debtor is someone who owes money to another person or entity. This can include someone who files for bankruptcy or against whom bankruptcy is filed. In secured transactions, a debtor can also be someone who has a property interest in collateral or is a seller of certain types of financial instruments. There are different types of debtors, such as 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 judgment.
A more thorough explanation:
Definition: A new debtor is a person who becomes bound as a debtor under a security agreement previously entered into by another person. In general, a debtor is someone who owes an obligation to another, especially an obligation to pay money.
Examples:
- John borrows money from a bank and uses his car as collateral. Later, he sells the car to Jane, who agrees to take over the loan payments and become the new debtor.
- Tom and Jerry are joint debtors on a credit card account. When Tom dies, his estate becomes a new debtor and is responsible for paying his share of the debt.
These examples illustrate how a person can become a new debtor by taking over someone else's debt or by inheriting debt after someone's death.