Filing for bankruptcy without my spouse
In Canada, if you are married and file for bankruptcy, this does not affect your spouse. You are considered to be solely responsible for any debts and if you declare yourself bankrupt, only you are liable for repayments.
Many people believe that married couples will have a joint responsibility for debts but this is false. The only time your spouse will be involved in your debt is if they have co-signed or guaranteed a loan in your name, and the burden is then yours to share.
What is bankruptcy?
Under the Bankruptcy and Insolvency Act (BIA), bankruptcy is a procedure that aims to bring debt relief to individuals and businesses who cannot pay their debts.
Bankruptcy can pause proceedings by stopping creditors from taking further action and can bide your time to get your affairs in order or delay repayments.
Bankruptcy is considered to be a final resort and you should always consult a licensed insolvency trustee for advice if you want to file for bankruptcy as there may be a better suited, alternative solution.
Are there any issues that will come up if I file for bankruptcy without my spouse?
If you choose to file for personal bankruptcy without your spouse, the only debts that will be an issue for both of you are any joint debts.
If you have accumulated debts that were co-signed or guaranteed by your spouse, your spouse will be liable for that debt and will be chased up by creditors.
However, it is important to note that your spouse is only responsible for debts if they have signed an agreement, not as a result of being married to you.
Will my spouse be liable in a bankruptcy if we have a joint credit card?
If you and your spouse co-signed to have a joint credit card, then you have committed to the repayments of the credit card even if something happens to one member or circumstances change.
If one spouse vanishes, passes away or doesn’t pay, the other spouse will still be responsible for this debt because it was jointly agreed.
What about supplementary credit cards?
A supplementary credit card is an additional credit that can be added onto existing credit and allow credit card holders to extend credit benefits to their loved ones.
It is common for spouses to have supplementary credit cards and this can actually be a big source of debt. If you are concerned about your spouse’s liability, you should call up your credit card company to discuss the situation.
If they cannot disclose information on account of the fact that your spouse is not the credit account holder, then you can be confident that they will be unaffected by any debts if you file for bankruptcy.
How will bankruptcy affect me and my spouse if we own property together?
It is highly likely that you and your spouse own property together. If the property owned by you and your spouse makes the bankruptcy exemption list, then items cannot be taken and sold if they are exempt.
If you and your spouse owned an item that would not be considered exempt or is highly valuable, you will most likely lose that asset in the bankruptcy process.
However, if you file for bankruptcy without your spouse, then 50% of profits made by selling the item will be paid to the trustee and 50% to the spouse who has not declared bankruptcy.
How can I be sure my spouse will not be affected by my bankruptcy?
If you are worried about the possibility of your spouse being affected by your personal bankruptcy, then you should speak to a licensed insolvency trustee who specialises in debt relief solutions. Bankruptcy should always be a final resort and there may be a viable alternative.
Harris & Partners offer debt solutions and advice to those struggling to cope with debt. You can find out more information about our bankruptcy service here or contact us to speak to a member of our team.