Legal Question in Business Law in California

Re: debt

The issue here would boil down to whether the debt is owed jointly, severally, or jointly and severally. These are pretty technical concepts, but generally a debt is joint and several if each of two parties to a contract received some benefit from it.

When a debt is joint and several, the creditor can proceed against either of the debtors for the entire amount. Your agreement to pay the whole debt, if made between you and the other debtor, wouldn't affect the creditor's rights, unless it were a party to the agreement.

Further, the agreement to pay the whole debt may be invalid, or voidable by the bankruptcy trustee, if it were made shortly before you filed for bankruptcy, or during bankruptcy.

Also, if one debtor pays the creditor more than his fair share of the debt, the overpaying debtor can sue the underpaying debtor for "contribution," in other words, reimbursement to make the burden-sharing fair.

A debtor in bankruptcy cannot be sued in the usual way, at least as long as the protection of an active bankruptcy proceeding is in place. There is a so-called "automatic stay" on attempts to collect debts from the debtor in bankruptcy. However, there are ways within a bankruptcy proceeding to assert claims; the bankruptcy judge can, in some circumstances, grant a creditor relief from the automatic stay, or may order the surrender of leased assets to the lessor or surrender of collateral to a secured creditor.