Archive for Category 'co-signed debt'

Question: Me and wife have joint about $80,000 of combined unsecured loan,a joint $30,000 of secred loan. I have another $60,000 of unsecured loan on my personal name ,the total equity in my house is around $80,000 and I am leasing a car (don’t own it).  My gross yearly income is $90,000 and my wife gross is $36,000. What are my option for bankruptcy,proposal or credit counselling?

Answer: Personal bankruptcy in Canada is probably not the correct answer for you.  If you have $80,000 in equity in your house, you would lose your house if you declared bankruptcy.  In addition, in bankruptcy the more you earn the more you are required to pay, so you would have significant surplus income in a bankruptcy.  With your family income, you would be bankrupt for 21 months, and the payments you would be required to make would be significant.

A consumer proposal is a possible solution.  The amount of payments required in a proposal would be more than you would be expected to pay in a bankruptcy, or else the creditors would not accept the deal.  So, the cost of a consumer proposal would also be significant.

In a credit counselling debt management plan you keep your house, but you are required to repay your debts in full, over a three to five year period.  That may be prohibitively expensive for you as well.

You can compare the different options using our debt options calculator.

A final solution may be to downsize your lifestyle.  You could sell the house and find a place to rent, and use the $80,000 in equity to either file a lump sum proposal, or repay a significant amount of your debt, which leaves you with much more manageable monthly payments.

The correct answer will depend on your income and expenses each month.  A credit counsellor or trustee can calculate the cost of the different options for you in more detail.

Question: My husband passed away recently, and at his death, had $11,000 of credit card debt. He owned three cards, all in his name only. I am a pensioner with a substantial mortgage to carry now. Am I responsible for paying off his credit card debts ? Can I refuse to do so without anyone coming after me for money?

Thanks

Answer: Yes, his debts are his debts.   No-one can pursue you for his debts.  It is a common misconception that because you are married, you automatically become responsible for your spouse’s debts.  That is not the case.  You are only responsible for a debt if you signed for that debt.

If you were joint on the credit cards with your husband, than you are responsible.  If the cards were solely in his name, and if you never had a card or used the card on his account, you are not liable for it.  More information can be found in this article about whether filing for bankruptcy affects your spouse, and in this article about debts that are joint with your spouse.