The purpose of filing an assignment in bankruptcy or consumer proposal is to provide you relief from your overwhelming debt.  On filing statutory documents, a stay of proceedings kicks in that stops unsecured creditors from continuing any action to collect their debt.  A garnishment of wages will stop and collection calls will cease.  On completing your bankruptcy or proposal, you are then relieved from your obligation to pay unsecured creditors (other than those that survive under S178 which is a topic for another day).

All of the above refers to you only.  A bankruptcy or proposal does not protect or relieve any other party that is responsible to pay the debt.  Creditors maintain the right to pursue a co-signor for collection of their debt.

At your initial assessment with a Licensed Insolvency Trustee, they will inquire if your debt was incurred in your name only or if the debt is co-signed, guaranteed or if there are any supplementary card holders on your credit cards.  If other parties will remain responsible to pay the debt, you will have to consider if this impacts your decision to file a bankruptcy or consumer proposal.

Please feel free to reach out for a free initial assessment to discuss further.

Kathy LenartBy Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)