How Filing Insolvency Affects

Your Spouse

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Bankruptcy · Consumer Proposals

Table of Contents

Understanding “Family” Debts

When You Have Joint Debts

A Joint Bankruptcy or Joint Proposal

Separation or Divorce & Debts

3

6

7

2

5

3

Understanding “Family” Debts

In a marriage or common-law relationship there can be three ways to view liability for family debts:

Being married or living common-law does NOT make you automatically responsible for your

spouse’s debts.

• Your debt• Your spouse’s debt• Joint debts

Understanding “Family” Debts

4

• Your spouse does not have to.• They will not be responsible for your debts

unless they have co-signed or you have joint debts.

• Their credit will not be affected by your bankruptcy or proposal.

Generally speaking your debts are your debts, your spouse’s debts are theirs.

If you declare bankruptcy:

When You Have Joint Debts

5

• Repay the debt• Consider a bankruptcy or

proposal themselves• File a joint bankruptcy or proposal

If both spouse’s names are on the loan or your spouse co-signed one of your debts, then both spouses are liable for payment.

Your spouse’s options:

Using, and signing for, a supplementary card, can create a joint debt. Talk to your trustee or lending

institution.

6

What is a Joint Bankruptcy or Proposal?

Both spouses are responsible for all bankruptcy or proposal payments in a joint filing.

If both spouse’s have debt, either joint or on their own, they can file a joint bankruptcy or joint proposal to deal with all their debts

Advantages:• Reduced administrative

costs• Increased debt limit in a

proposal $250,000 x 2

7

Separation or Divorce & Debts

Joint debts cannot be eliminated by a divorce or separation agreement.

• Divorce does not split your debts 50-50

• Your lender must agree to removing one spouse from legal responsibility for payments

If your ex-spouse files bankruptcy and you have joint debts, your lender will look to you for payment

There is hope. You can be debt

free. View our Guide to How Bankruptcy Affects Your Spouse

Or give us a call at 310-PLAN