Legal Definitions - new debtor

Definition: A new debtor is a person who becomes bound as a debtor under a security agreement previously entered into by another person. In general, a debtor is someone who owes an obligation to another, especially an obligation to pay money.

Examples:

• John borrows money from a bank and uses his car as collateral. Later, he sells the car to Jane, who agrees to take over the loan payments and become the new debtor.
• Tom and Jerry are joint debtors on a credit card account. When Tom dies, his estate becomes a new debtor and is responsible for paying his share of the debt.

These examples illustrate how a person can become a new debtor by taking over someone else's debt or by inheriting debt after someone's death.