Does filing a consumer proposal affect a loan that I co-signed?
September 2nd, 2015 by Questions
A few years ago, I co-signed a car loan, for a friend. The vehicle and insurance are in his name, and he pays everything, out of a joint bank account. ( which I have nothing to do with )I am about to make a Consumer Proposal and am worried about our friendship since I co-signed for his car loan. Does filing a consumer proposal affect a loan that I co-signed?
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September 02, 2015 at 7:15 am, Jillian Taylor-Mancusi, Trustee | B.A. | C.I.R.P said:
Co-signing a car loan for someone else does not create in itself a joint ownership situation. The car, from what you described, quite clearly belongs to your friend. By co-signing you simply told the creditor that if your friend is unable to make the payments they can call upon you to make those payments.
If you file a consumer proposal then the potential liability that you have as a result of having co-signed is called a Contingent Liability. The creditor, should they feel that they are relying on your guarantee of the loan can file a claim and value that claim based on whether your friend is likely to continue to make the payments or not. This in itself will not jeopardize your friends buying the car nor should it create a riff in the friendship. You co-signed in order to help your friend get the car. The filing of a consumer proposal is not likely to create a problem for him.