Free Consultation

Personal, private lender loans

How are personal funds borrowed from non-institutional lenders seen in a consumer proposal? For example, if I borrowed from friends (or friends of friends, in my case) what standing do they have in a consumer proposal or bankruptcy meeting as a creditor? Are they on even footing with other creditors — like CRA, banks, etc.?

Posted from: Ontario

One Response to “Personal, private lender loans”

A licensed trustee said...

All unsecured creditors have the same status – a dollar of debt is a dollar of debt…. They will have to provide proof of the debt: cancelled cheques, or a bona fide loan agreement, prooif of payment history – something to validate the debt other than you simply agreeing to it.

If these personal loans are from family members you need to know that they can vote to reject your proposal, but their votes “for” won’t be counted. This is to stop people from getting family members to force unfavourable terms on all of the other creditors.