In this video, Richard Killen, a Toronto-based Licensed Insolvency Trustee talks about, What Happens To My Co-signor?.
When people do a bankruptcy or even a consumer proposal, if they have a co-signor on one of their debts, they are going to be very concerned about what is going to happen in regard to their co-signor. The fact of the matter is that when you do a bankruptcy or consumer proposal, you are just relieving your own responsibility for those debts. You are not able to do anything for the other person. In other words, if I were to co-sign somebody else’s debt, they go bankrupt, they are not responsible for it anymore but now the creditors are going to want me to pay, and that is just a fact of life. That is what co-signing is all about. Now, whether or not that person has to pay the whole thing at once, usually can be worked out with the creditor but a bankruptcy or proposal will not relieve somebody else from their responsibilities.
If you are uneasy about bankruptcy you should definitely visit a licensed insolvency trustee so that you will be given an advice about your bankruptcy problems.