February 4th, 2009 by Questions
What happens to co-signers when you do a consumer proposal for the line of credit that they co-sign on?
Posted from: Ontario
February 06, 2009 at 8:14 am, A licensed trustee said:
When the primary borrower files for either a consumer proposal or bankruptcy the crditors usually (almost always) contact the co-signers to collect on the debt. That may mean simply picking up the payments that the primary borrower may no longer make, or it may be a demand to repay the debt in full if the primary borrower was already in arrears.
If you are thinkning about filing for a proposal or bankruptcy the polite thing to do is to speak to your co-signers BEFORE you file. If they contact the bank first (beofre the bank is notified of your proposal or bankruptcy) they should be able to negotiate repayment terms with the bank – instead of having to repay the debt in full immediately.
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