Will Filing for Bankruptcy Affect my Spouse?

Will Filing for Bankruptcy Affect my Spouse?

Written by Caitlin Wood
Last Updated November 25, 2015

In Canada, if an individual is married and files for bankruptcy it does not affect their spouse. You are the only person who is responsible for the money you owe; your debts are yours alone. If you file for bankruptcy your debts are discharged, no one including your spouse is responsible for the repayment of your debts.

It’s a common assumption that your spouse is automatically responsible for your debts simply because you are married. One of the main reasons people believe this is because collection agents often use this lie to try and manipulate you into paying them. This is of course a scare tactic; their job depends on collecting money from people in debt so more often than not they will say anything to get you to pay them.

The Exception to the Rule

There is only one exception to the rule and it’s extremely important that you understand the difference between your own personal debts and the debts you share with your spouse. If your name is the only name associated with the debt then it is yours alone. But if your spouse co-signed or guaranteed a loan for you then the debts is both of yours.

Joint Debts

Joint debts are the only type of debts that become an issue when one spouse files for personal bankruptcy. If you have any kind of debt that was co-signed or guaranteed by your spouse and you file for bankruptcy your spouse becomes fully liable for that joint debt.

Creditors will pursue your spouse for repayment of the joint debt. If you have debt that was yours alone then creditors will not pursue your spouse for repayment of that money, and if they do they are trying to scare your spouse into paying back your debt illegally.

Remember, the only reasons your spouse is liable for the debt is because they signed for it, not because they are your spouse.

What about Supplementary Credit Cards?

Supplementary credit cards are extremely common among married couples and can complicate this situation even more. First thing you need to do it determine whether the holder of the supplementary card is jointly responsible for any and all debts accumulated using that credit account. Because supplementary credit cards have the same account number as the primary credit card it is possible that both card holders will be held responsible for the debt.

If you want to quickly figure out if your spouse, who uses the supplementary credit card, is responsible for all the debt associated with the account simply call your credit card company. If the person you speak to explains that they cannot discuss any information about the account with your spouse because it is not their credit account, you can be reasonably sure that they will not be held liable for debts when you file for bankruptcy. On the other hand if your credit card company will speak with your spouse about the credit account then you can be reasonably sure that they will in fact be held liable for the debt if you file for bankruptcy.

While this method of verification can’t guarantee anything it will at least help you decide what you need to prepare for should you need to file for bankruptcy.

Bankruptcy, Debt and Divorce

Dealing will both bankruptcy and a divorce can be extremely stressful and complicated. This is why we cannot recommend enough that you seek the professional help of bankruptcy trustee; they will help determine who is responsible for what debt and will be able to guide you through the entire process. Trying to tackle both a divorce and bankruptcy without any help could potentially lead to even worse financial issues. Getting in contact with a professional as soon as possible could end up saving you a lot of money, time and stress.

Rating of 5/5 based on 2 votes.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Make Smarter Borrowing Decisions

Whether you have good credit or poor credit, building financial awareness is the best way to save. Find tips, guides and tools to make better financial decisions.

Save With Loans Canada

Special Offers

50 Free Trades Offer

50 Free Trades Offer
Ends August 31st, 2022

Almost $500 in commission-free trades. Code “50TRADESFREE”. Conditions apply.

View Offer
Borrow Today, Don’t Pay Till July

Borrow Today, Don’t Pay Till July
Limited Time

Borrow $500-$50,000 from Fairstone by May 31 and don’t pay until July.

View Offer
Build Credit With Refresh

Build Credit With Refresh

Build credit while spending money with the Refresh Financial VISA card.

View Offer
Build Credit For $7/Month

Build Credit For $7/Month

With KOHO’s prepaid card you can build a better credit score for just $7/month.

View Offer
Industry Spotlight

What's happening with Canada's credit industry?

addy ⎯ Making Real Estate Accessible To All Canadians

addy ⎯ Making Real Estate Accessible To All Canadians

Check out our interview with addy; a platform that allows Canadians to invest in different properties across Canada with as little as $1.

Read Post
Find The Best Rate
In Your Region
Best Personal Loan Provider by Greedy Rates

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Keep Track Of Your Credit Score

Subscribe with Credit Verify to monitor your credit rating and get your free credit score.