Q. I am a co-maker in a loan agreement where the debtor used checks of other people as collateral.The debtor is no longer paying his debts and the checks bounced. What is my liability?
A. There are two possible cases that may be filed here.
One is collection of sum of money for the debt per se and violation of B.P. 22 or issuing check that bounced or not funded when encashed or deposited.
In the civil case for collection of sum of money, the debtor is the one who is primarily liable. The case will be filed against him. However, if the debtor is incapable of paying, as a co-maker, the lender may run after you. This however would only be possible if all sources of payment by the debtor had already been exhausted, if he is still capable of paying or has properties that the lender can still run after, the lender has no business suing you.
Violation of the Bouncing Checks law on the other hand is a criminal offense and liability is a personal to the owner of the check. Thus you and the debtor will not be included in the lawsuit.
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