Hi there. Generally speaking, if two people are named on a loan, both will be equally responsible for repaying the debt. If one person is declared bankrupt, the other person will still be legally required to pay back the loan. Unless the terms of the loan specify otherwise, the lender will have the right to seek full repayment of the loan – whether that money comes from the bankrupt borrower (via bankruptcy proceedings) or the non-bankrupt borrower. For you, this means that, if your name remains on the loan, you will be responsible for repayment of the balance of the debt if your former partner is now bankrupt and unable to contribute to the repayment.

You should consider contacting the lender to discuss your situation and see if there is a way to have your name removed from the loan. This may be difficult without your former partner’s consent or if he has already entered bankruptcy.

The verbal agreement with your former partner will only be recognised in the eyes of the law if it was sufficiently certain to create a legal contract, or if your former partner’s conduct led you to reasonably believe you would be removed from the loan and you acted on that belief and later suffered detriment. These legal claims can be difficult to prove, especially if there is little or no evidence of the verbal agreement you reached with your former partner. Furthermore, even if you can prove you reached an agreement, it may only entitle you to a legal claim against your former partner; it will not necessarily help you avoid having to repay the loan to the lender.

Suggested way forward

If you are unable to negotiate a solution with the lender, you should consider speaking to a lawyer who can help you advise you of your legal rights and the best course of action. By pressing the “Consult a Lawyer” button, LawAdvisor can help you search for experienced lawyers and obtain fee proposals for their services. Costs for legal advice and representation will vary between providers based on experience and the scope of services.