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Consumer Proposal and Joint Debt

I am considering filing a Consumer Proposal however am facing a roadblock. I have a joint debt with my sister (she co-signed). She is purchasing a house that hasn’t yet closed. What will happen to her credit if I file a consumer proposal, will it ruin her credit as well? I owe this particular bank for a line of credit (joint) as well as a visa card, what are the chances they will not accept the consumer proposal thinking that if I go bankrupt they can go after my sister. If they accept the proposal will they still go after her for their money?

One Response to “Consumer Proposal and Joint Debt”

A licensed trustee said...

I have some very bad news for you – regardless of whether you file a consumer proposal or bankruptcy the bank has the right to try and collect from your sister for the joint debt. If she co-signed or co-borrowed the loan and you file then she should expect the bank to demand that she make the payments.

Her credit will only be affected if she fails to make the payments on the joint debt.

Yours is a perfect example of why we discourage people from accepting credit when/if a co-signer is required. We see too many cases where for reasons often beyond the borrowers control they can’t make the payments and then the co-signer is held responible for the debt.