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.
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 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.
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.
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.
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Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. 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.
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