What occurs when multiple people sign a promissory note?

When multiple people sign a promissory note, they create a legal obligation that holds each signer accountable for the entire debt, leading to what is known as joint and several liability. This means that if the borrower defaults on the payment, the lender has the right to pursue any one of the signers for the full amount owed. The key aspect of joint and several liability is that it protects the lender's interests by allowing them flexibility in collecting the debt.

In practical terms, if one signer is unable to pay, the lender can seek payment from the others without needing to pursue each one in order. This arrangement fosters a greater likelihood of recovering the owed amount since the lender is not limited to one specific borrower but can choose the most financially responsible person to settle the debt.