Does Filing for Bankruptcy in Canada Affect My Spouse?

Filing for bankruptcy in Canada does not have to directly affect your spouse’s credit, but there are some exceptions.

Most people have the belief that the fact that you are married or are living common law the partner will be automatically responsible for your debts. This is not true. The debts you incur are yours not your partners. No one else is responsible for the money you owe.

A collection agency will sometimes try to make you believe that if you don’t pay up they will go after your spouse for the money. The truth is that they can’t, but the threat of doing so motivates people to pay. It is simply a bluff.

Here is the problem. Often times both the husband and wife will sign for a loan. This happens all the time. Let’s say the husband wants to buy a boat and it has been agreed that he will pay for it from his own income but the lender wants his spouse to sign as well. This may not be necessary to get the loan but the lender asks for it anyway, wanting all the insurance he can get.

The same thing happens when a couple gets a credit card. Even though it’s only going to be the one person using it, the bank will try to get both signatures if they can.

In both of these instances both parties are responsible for the debt, even if the two are not together anymore. If the one doesn’t pay, the other one will have to. It sucks but it’s the law.

Remember, your spouse is liable for the debt, not because they are your spouse, but because they have signed for the debt.

On the other hand if all of the debts are in just one of the couples name then it doesn’t matter whether you are married or not. Only the person who has signed for the credit is responsible for the money owed.

The bankruptcy in this case will only affect the one spouse. The other spouse does not have to declare bankruptcy because they are not responsible for the money their partner cannot pay back.

These issues are complicated. It is often difficult to determine if a credit card is a joint card, or just a supplementary card.

If you are considering filing for bankruptcy in Ottawa then why not give Jean Lazard a call. He understands what you are going through and can help!