Bankruptcy in Canada and Loan Co-signed by Sister

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Question: My sister cosigned for a small loan, and decided to have the payments come out of her bank account instead of mine for the entire agreement. I need to file bankruptsy so she wanted to know if she was expected to make the total in full, or just keep doing monthly payments.She cant afford the total, but could still do the payments.

Answer: If you file bankruptcy, your sister becomes fully liable for the loan.

Generally the bank will allow her to continue making the regular payments; they generally don’t demand payment of the full amount.

To be safe, your sister should contact the bank before you declare bankruptcy and confirm that the payments will continue to come out of her account on a regular basis so that your credit is not impacted.

Category: Bankruptcy Q&A |

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