Now a year later, without written notice, I am receiving phone calls from a collection agency, in reference to that original loan, saying that they will turn this to a legal suit within the coming weeks.
It turned out that when the creditor accepted my friend’s consumer proposal, they struck her name from the bills, leaving me as the sole debtor. Without notice, they sent the file to a collection agency, which is now threatening legal action, in a short period of time.
In my eyes, this means that the creditor would end up receiving twice the original loan amount, as they are receiving the money from the consumer proposal, which I have not signed nor seen a copy, and the amount that they want to collect from me.
Having contacted the trustee that did up the proposal, I’ve had verbal confirmation that a clause was put in to “NOT hold the co-borrower liable of this debt”. The collection agency had no knowledge the the proposal, and I’ve arranged for them to receive a copy from the trustee, but as my name is not on the proposal, I am unable to get a copy myself.
How can something like this happen and what recourses do I have?
Answer: First, a consumer proposal is a public document. We suggest you contact the trustee, and advise them that you are a creditor in the proposal, since you are owed money as a result of co-signing the loan. You will then be able to obtain a copy of the proposal.
Second, you should contact the bank (not the collection agency), and ask them to advise the collection agency that they have already agreed to remove your name from the debt as a result of the acceptance of the consumer proposal.
If you are not successful with this approach, you should consult a lawyer.
On a side note, it is very unusual for a proposal to contain a clause eliminating liability for a co-borrower, so you will want your lawyer to review the proposal to determine your next step.