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Debra, Lawyer
Category: Canada Law
Satisfied Customers: 101381
Experience:  Lawyer
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Good evening ! My son started a business and I became a

Customer Question

Good evening !
My son started a business and I became a guarantor when he borrowed money from the bank. This was done 10 plus years ago.
After many years of payments to his principals , he declared Division 1 and all parties were notified.
At the court hearing no one appeared , thus the proposed amount of $25,000 . was accepted by the court. The Trustee then apportioned the % to each one accordingly, one of which was the bank that I had co-signed as guarantor.
By virtue of the fact that the bank did not appear in court , does this nullify the co-signor's obligation ?
Also , the bank raised the date of the co-signor was also incorrect.
Thank you , Luc
Submitted: 1 year ago.
Category: Canada Law
Expert:  Debra replied 1 year ago.
Not it doesn't. You are still liable. But in Ontario they cannot sue you unless they do so within two years of the debt going into default unless a partial payment was made towards the loan or you acknowledged the debt in writing so if this was over ten years ago they cannot sue you now.Let me know if you need any further clarification.
Customer: replied 1 year ago.
Thanks for your fast response. How ever, what I was looking for was the use of contra proforentum as my son declared division 1 and by doing so , the bank accepted his debt of $25000 (originally ) now $20,000 on % to 17,800 as settlement for this debt. Since the bank accepted this division 1 proposal, this should mean that He has no further debt to the bank. Therefore , I should not have any as well , since the bank accepted his settlement proposal. I will be taking this argument to court. Thanks again.
Expert:  Debra replied 1 year ago.
I don't know why I would have discussed that doctrine. I have no knowledge of the contract but I doubt that the mortgage or the guarantee had any ambiguous terms so I am really not following your argument. In almost all cases a guarantor is held liable if the debtor declares bankruptcy. I suggest you read what you signed and I am sure you will see that you agreed that if your son declares bankruptcy or undergoes a consumer proposal or a division 1 you remain liable until the full debt is paid off. But I certainly hope you succeed.