"Joint & Several" - What does this really mean

fermi

HaSBeenConsolidated wrote: »

If the parties divorce will it be possible to split the debt between the two parties equally / unequally?

If the parties are not married and go their separate ways, will the debt be split so that each assumes responsibility for their share of the Loan - for example 45% - 60%.


Splitting the Loan like this is what appears to be assumed to be the likely outcome.

What is "assumed" to be the likely outcome should be what the terms of the agreement in relation to liability state.

If you sign a joint loan, then unless specified otherwise in the terms, you should assume joint and several liability and the consequences that flow from that.

Find_The_Real

ReadingTim wrote: »

What joint and several liability means has been clearly covered by other posts, but I'd imagine there are more people who don't know/appreciate what it means than do, such as the OP.

I'd be interested to see the extent to which the "and several" part of the phrase is adequately explained in any 'key facts' / T&Cs; or if the phrase/explanation was amended to 'jointly and individually', as that would probably mean more to the average reader!

On the 2 joint loan forms I signed, I thought it was pretty clear when it stated "If the borrower consists of more than one person, you are jointly and severally liable for the borrowers obligation under this agreement. This means you can each be made liable to perform the borrowers obligations under this agreement, including but not limited to, payment of the outstanding balance."

I've been there and there is no way I hold the banks responsible for my very poor choice of ex partner and subsequent stupidity at taking out joint loans.

HaSBeenConsolidated

ReadingTim wrote: »

What joint and several liability means has been clearly covered by other posts, but I'd imagine there are more people who don't know/appreciate what it means than do, such as the OP.

I'd be interested to see the extent to which the "and several" part of the phrase is adequately explained in any 'key facts' / T&Cs; or if the phrase/explanation was amended to 'jointly and individually', as that would probably mean more to the average reader!

This is what I was driving at. The Banks practices with these Loans is acknowledged.
In summary what they are doing is granting a relatively Large Loan to a couple based on JOINT incomes - and subsequently hold each of the individuals in the couple fully responsible for the total debt, and will chase the easiest one to find.


The Banks do this even though they know, or should & would if they used they standard Loan Affordability criteria & tests, that neither of the couple are financially strong enough, don't have sufficient income, to bear this repayments size of loan on their own.


Does anybody think that the banks are operating responsibly, and in the best interest of their clients, with such a business practice?

[Deleted User]

HaSBeenConsolidated wrote: »

Does anybody think that the banks are operating responsibly, and in the best interest of their clients, with such a business practice?

Yes, as it allows people to borrow at lower rates than individually, and also increases the chances of repayments being met.

HPoirot

Brock_and_Roll wrote: »

"joint and several" liability is a very old and stable legal concept in English law fully supported by case law over the years.

Having read the OP's other thread, the OP is looking for a way to enable a 3rd party to get out of a joint loan agreement that was taken out. In short one parter was just 18 and naive, the other partner older and in more debt. Suffice to say that the couple split and the older partner has naffed off and/or has no money, leaving the younger partner in a hole.

The OP is looking at pursuing a mis-selling claim elsewhere (good luck with that!) but to be clear the OP has absolutely no hope whatsoever of challenging the concept of joint & several liability.

If the OP repays a joint and several loan then he can sue the other debtor for his share / balance of the payment which would have nothing to do with the bank. The bank would be perfectly entitled to pursue only one of the parties for full repayment as all parties are liable for the full amount.

ReadingTim

Find_The_Real wrote: »

On the 2 joint loan forms I signed, I thought it was pretty clear when it stated "If the borrower consists of more than one person, you are jointly and severally liable for the borrowers obligation under this agreement. This means you can each be made liable to perform the borrowers obligations under this agreement, including but not limited to, payment of the outstanding balance."

I've been there and there is no way I hold the banks responsible for my very poor choice of ex partner and subsequent stupidity at taking out joint loans.

Fair enough - I've never seen/signed one of these such loan applications, so I don't know how clear the explanations are!

However, even the one you quote above contains extraneous legalese, which could be struck out for clarity: This means you can each be made liable to [the] [STRIKE]perform the borrowers obligations under this agreement, including but not limited to, [/STRIKE]payment of the outstanding balance."

HPoirot

HaSBeenConsolidated wrote: »

Does anybody think that the banks are operating responsibly, and in the best interest of their clients, with such a business practice?

Nothing to do with banking practice, this is a very old concept of liability which has worked well in risk limitation. As has been said, the lender can't be held responsible for who you associate with to jointly and severally ask for a loan.

...and no, I am nowhere near being a banker...:p

poppasmurf_bewdley

HaSBeenConsolidated wrote: »

Does anybody think that the banks are operating responsibly, and in the best interest of their clients, with such a business practice?

Of course they are!

Maybe it should be asked: Are the two people taking out the loan being responsible, knowing that each of them are incapable of paying back the loan on their own should they split?

The practice of joint and several liability has been around for hundreds of years, be it for loans or other things. Just like both parties to a joint account are liable for an overdraft. It's something that you are never going to overturn.

HPoirot

ReadingTim wrote: »

Fair enough - I've never seen/signed one of these such loan applications, so I don't know how clear the explanations are!

However, even the one you quote above contains extraneous legalese, which could be struck out for clarity: This means you can each be made liable to [the] [STRIKE]perform the borrowers obligations under this agreement, including but not limited to, [/STRIKE]payment of the outstanding balance."

ReadingTim, the 'extreme legalese' you struck out would cover interest, essential I would say to the lender!

ReadingTim

HaSBeenConsolidated wrote: »

This is what I was driving at. The Banks practices with these Loans is acknowledged.
In summary what they are doing is granting a relatively Large Loan to a couple based on JOINT incomes - and subsequently hold each of the individuals in the couple fully responsible for the total debt, and will chase the easiest one to find.


The Banks do this even though they know, or should & would if they used they standard Loan Affordability criteria & tests, that neither of the couple are financially strong enough, don't have sufficient income, to bear this repayments size of loan on their own.


Does anybody think that the banks are operating responsibly, and in the best interest of their clients, with such a business practice?

Yes, as the concept of joint and several is well established in English law.

Moreover, the converse of your point also exists - are you borrowing responsibly knowing full well that you are individually responsible for a joint loan?!?