Joint Debts in a Consumer Proposal: 3 Things You Need to Know

Joint and cosigned debts are very common.  Perhaps you and your spouse had a bank loan together, or maybe your parents cosigned your line of credit.

What happens when one of the co-signors files a consumer proposal?  Here are 3 things you need to know.

  1. The debt isn’t split 50/50.  Both you are the co-signor are responsible for paying the entire debt.  If either of you fails to pay, the other is responsible for the entire amount.
  2. If you and your spouse separate, you are both still responsible for the entire debt, even if your separation agreement states otherwise.  The separation agreement is between you and your spouse.  The creditor  will still expect full payment from you.
  3. Cosigned debts can be included in a consumer proposal.  However, filing a consumer proposal does not remove the other co-signor’s responsibility to pay it.  The creditor will receive payments from both the consumer proposal and the other co-signor.  If your qualify, you may be able to file a joint consumer proposal.
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2 thoughts on “Joint Debts in a Consumer Proposal: 3 Things You Need to Know

    • J. Douglas Hoyes

      Carl: This is a complicated question, but the simple answer is no, you must complete your bankruptcy before you can file a consumer proposal for new debt.

      You can file a consumer proposal while bankrupt, but it would only include debts that existed at the start of the bankruptcy.


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