Legal Definitions - beneficium divisionis

Beneficium divisionis, also known as the Benefit of Division, is a legal principle that protects a co-guarantor or co-surety from being solely responsible for an entire debt when there are other solvent co-guarantors. When this benefit is invoked, the creditor must divide the debt among all solvent co-guarantors, and each guarantor is then only liable for their proportionate share of the debt. This prevents a creditor from demanding the full amount from just one guarantor, even if that guarantor is capable of paying the entire sum, when others are equally responsible and able to contribute.

Here are a few examples to illustrate this concept:

• Business Loan Guarantee: Imagine three business partners, Alex, Ben, and Chloe, who jointly guarantee a $300,000 loan for their startup company. The company later faces financial difficulties and defaults on the loan. The bank, seeing that Alex has substantial personal assets, attempts to collect the entire $300,000 from Alex alone.

  In this situation, Alex can invoke beneficium divisionis. If Ben and Chloe are also solvent (meaning they have the financial ability to pay their share), Alex can demand that the bank divide the debt among all three partners. Consequently, Alex would only be liable for their one-third share ($100,000), and the bank would have to pursue the remaining $200,000 from Ben and Chloe.

• Personal Loan Co-Signature: A young adult takes out a personal loan, and both their mother and father co-sign as guarantors. The young adult later defaults on the loan. The lending institution, knowing the mother has a stable, high-paying job, tries to collect the full outstanding balance solely from her.

  The mother can utilize beneficium divisionis. Assuming the father is also financially capable of contributing his share, the lender would be required to divide the debt between the mother and father, making each responsible for half of the outstanding amount. The mother would not be solely responsible for the entire debt.