New Debtor Law and Legal Definition
New debtor means a person who may become bound by a security agreement entered into by another person. In order to substitute a new debtor in the place of an original debtor, the creditor, the original debtor and the new debtor must all agree that the new debtor shall be substituted for the old and the original debtor must be discharged from his obligation. A "new debtor" is characterized by a one-asset entity that has been created or revitalized on the eve of foreclosure to isolate the insolvent property and its creditors.[ In re Meyers Way Dev. Ltd. Partnership, 116 B.R. 239 (Bankr. D. Wash. 1990)].
