Personal loans and cosigned debts
My unsecured debts include $83,500 to banks in the form of credit cards, lines of credit and overdraft protection. I also owe $77,000 to my parents. In addition, I recently co-signed a new car loan for my 25 year old son in the amount of $26,000 for which he has been making the required payments. My questions are these:
As my parents are retired with little income, is it possible to continue their regular payments and exclude them from the debtors?
Secondly, how will any action affect my son’s car purchase?
Not legally. Unfortunately, your parents should be treated just like your credit cards – no better and no worse.
I realize that they are your parents and not some large corporation or bank, but in the eyes of the law, an unsecured debt is an unscured debt is an unsecured debt… If you treat one creditor better than your other creditors prior to filing bankruptcy (or a proposal) your trustee will be required to take action against that creditor to recover the money.
If you were to continue to pay one unsecured creditor after you filed then the rest of your creditors have the right to expect the same treatment (in other words it would defeat the purpose of the bankruptcy). In addition, it is considered an offence under the law and might get you into serious trouble.
Sorry, but as a trustee, I am not able to advise you how to circumvent the law.