Question: My friend co signed on a line of credit for her friend who is about to file for personal bankruptcy. My question is what portion of the line of credit is she responsible for? Wll she be responsible for the entire line of credit? How will this affect he credit rating if she decides to pay it off?
Thanks.
Answer: A co-signer is responsible for the entire amount owing, in the event that the primary borrower declares bankruptcy in Ontario. The best option for the co-signer is to talk to the bank now, and advise them that they will continue making the payments. By continuing with the payments the loan remains up to date, so it should have no negative impact on the co-signer.