How will my bankruptcy effect my spouse
in Thunder Bay, Ontario?
This is the most common question
asked by people. We get this question from people
who have been married for many years, and from people
who are about to me married, common-law partners,
and even from same sex couples.
In most cases, the answer to the
question is very simple: Your debts are your debts;
only you are responsible for them. If you go bankrupt
in Thunder Bay, Ontario, your debts are discharged.
Your husband or wife or common-law spouse is NOT responsible
for your debts.
Many people have the mistaken belief
that because you are married, your spouse is automatically
responsible for your debts. This mistaken belief comes
from the fact that many collection agents, when they
are collecting debts, tell you that if you don't pay
they will go after your spouse for your money. This
is a collection agency scare tactic; they can only
go after you for your debts.
The only time a bill collector can
pursue your spouse for your debt is if your spouse
has co-signed or guaranteed your debt. For example,
if you took out a loan and had your spouse co-sign
for it, if you don't pay, the bank can pursue your
spouse for the money. They can go after your spouse
because, once you co-sign a debt, it becomes your
debt. The bank will go after your spouse because it
is now also your spouse's debt; not because they are
your husband or wife, but instead because they also
signed for the loan.
It is very common to get your spouse
a supplementary credit card. Even though your spouse
may not have signed the credit card application form,
if they have a card with their name on it, and if
they have used the card, they are responsible for
the entire debt.
If you have no joint debts, one spouse's
bankruptcy will not effect the other spouse's credit
rating. However, the bankrupt spouse may not qualify
as a co-signer in the future due to the bankruptcy,
so one spouse's bankruptcy may have an indirect impact
on the other spouse.
What happens if we get divorced
in Thunder Bay, Ontario?
In Ontario, if you are divorced,
matrimonial property is split between the husband
and wife. (If you owned a house together worth $100,000
and got divorced, and that was the couple's only asset,
if the house was sold, each person would receive $50,000).
However, if you have debts together and you get divorced
in Ontario, your are each responsible for the entire
debt.
Even if your separation agreement
states that you will each assume half of the debt,
if the other party does not pay their half, the creditor
can pursue the other spouse for the full amount of
the debt.
You do not each owe half of the debt;
it's not a 50% - 50% split; it's a 100% - 100% split
if one of the partners doesn't pay.
If you or your spouse is considering
bankruptcy in Thunder Bay, Ontario, we recommend that
you call one of our expert or e-mail
us immediately to determine your options. The
longer you wait to deal with these issues, the more
difficult it becomes to deal with these debts.
In virtually all cases a Proposal
to Creditors or a Personal
Bankruptcy will deal with your debts, so we strongly
recommend that if you or your spouse has more debt
than you can handle, call us or e-mail
us immediately to determine your options.
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