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Joint and several liability
Also called jointly and severally, J&S liability, joint and several.
Each obligor is liable for the entire debt, not a share of it, so the creditor may collect the whole balance from whichever one is easiest to reach.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Where two or more people sign as guarantors, the guaranty almost always makes them jointly and severally liable. That phrase means the creditor's claim against each of them is for the full amount. It may sue one, all, or any combination, in any order, and it is under no obligation to spread the pain.
In practice creditors do not spread it. They pursue the guarantor with the most reachable assets — a house with equity, a salary, a personal account — and collect the entire balance there.
Contribution
A guarantor who pays more than their share has a right of contribution against the co-guarantors. That is a separate lawsuit, brought by you, at your expense, against people who by definition have less money than you do or the creditor would have chased them instead. It is a real right and a poor remedy.
Some guaranties waive contribution rights among guarantors, or subordinate them to the creditor's claim until it is paid in full. Worth locating.
Where else it appears
Co-borrowers on a note. Partners in a general partnership, who are jointly and severally liable for partnership obligations by operation of law in most states. Members of a consolidated group under certain tax liabilities.
Where this one catches people
Owning half the business does not make you liable for half the debt. Two 50/50 owners who both sign are each liable for 100%, and the one with a house loses it while the one with nothing loses nothing. Related and equally common: leaving the business does not end the exposure. Selling your shares, resigning as an officer, or a divorce decree allocating the debt to your ex-partner changes nothing between you and the creditor — only a written release signed by the creditor does that, and there is no obligation to give one.
Worked through
Illustrative. Two equal owners guarantee a $180,000 balance. The business fails. Owner A has home equity and a salaried job; Owner B has neither.
The creditor takes judgment against both and enforces entirely against A, collecting $180,000. A's remedy is to sue B for $90,000 in contribution — a separate action, at A's cost, against someone with no assets. A's practical recovery is likely to be nothing.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
Where you will meet this term
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Joint and several liability — common questions
What does joint and several liability mean?
Each obligor is liable for the entire debt, not a share of it, so the creditor may collect the whole balance from whichever one is easiest to reach.
Where does joint and several liability catch people out?
Owning half the business does not make you liable for half the debt. Two 50/50 owners who both sign are each liable for 100%, and the one with a house loses it while the one with nothing loses nothing. Related and equally common: leaving the business does not end the exposure. Selling your shares, resigning as an officer, or a divorce decree allocating the debt to your ex-partner changes nothing between you and the creditor — only a written release signed by the creditor does that, and there is no obligation to give one.
Is joint and several liability the same as an interest rate?
Joint and several liability is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does joint and several liability apply to?
Merchant Cash Advance, Working Capital, Term Loan, SBA Loan, Equipment Financing, Invoice Financing.
Is there a worked example of joint and several liability?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside joint and several liability?
Garnishment, Guarantor, Guaranty, Judgment, Limited liability company.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.