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joint account in consumer proposal

I just start a 36 months $700 monthly consumer proposal in Oct2007. My BMO mastercard is also included in this consumer proposal, the balance is $5000CAD.

I am the primary card holder of BMO mastercard, my sister is the secondary card holder of BMO mastercard, but she had never used any money in this credit card.

Now collection people from BMO told me that either I or my sister should pay off the outstanding balance. Especially my sister should be responsible for the debt, because she is not in consumer proposal nor in bankruptcy, she is with good credit rating.

My question is: since my sister never used this credit card, will she still be responsible for the debt? I definitely am responsible for the debt and it is included in the consumer proposal already. Will BMO collection continue to chase my sister for $5000?

One Response to “joint account in consumer proposal”

A licensed trustee said...

Unfortunately, if your sister jointly signed for the card when the account was set up then it doesn’t matter whether or not she ever used it.

Your sister has couple of choices:

1) agree to repay the debt – call this the path of least resistance, but it will cost her $5,000; or

2) inform BMO that she disbutes the debt and ask them to initiate legal action against her. BMO will have to prove to the Court that your sister signed for the debt. If they can the Court will likely order her to pay – if they can’t she will likely be obsolved from the debt; or

3) raise the issue of option 2 with BMO and then negotiate a deal to repay part of the debt.

A word of caution – you do not have the option of making payments on this debt. If you do and your trustee becomes aware of your payments you may place your proposal in jeapardy (ie if you can afford to repay BMO then I guess you can afford to repay everyone!).

I am sorry, but this is now somwthing that your sister has to deal with.