If my ex-spouse files bankruptcy, will it affect our joint mortgage?

Sunday, April 30, 2017 - 21:42

Bankruptcy, Asset Concerns, Debt and Relationships

If you file for bankruptcy your ex-spouse may be affected if you have a joint mortgage. Your bankruptcy will remove you from your responsibility to pay that debt, however, it does not:  

a) require your mortgage lender to take your name off of the mortgage; or 

b) take your name off of the deed/title.

When you file for bankruptcy, all of your non-exempt assets are assigned to your Trustee to be liquidated for the benefit of your unsecured creditors. If the home has no equity, the trustee can arrange with your ex-spouse or his/her lawyer to sign over the Trustee’s interest in the property by way of a Trustee’s deed. However, if there is equity in the home, the Trustee will be required to recover the equity on behalf of your unsecured creditors. The ex-spouse can negotiate a settlement with the Trustee to pay out the other spouse’s equity in exchange for a Trustee’s deed giving him or her full title to the property. If no agreement is reached, the Trustee can register against the title to the property until a settlement is in place.

To get your name off of the mortgage, your ex-spouse will have to qualify for the mortgage, in his or her own name, when the mortgage comes up for renewal. Whether or not they qualify is up to their financial institution. For our bankrupt clients we advise against signing any mortgage renewal documents if they have given up their interest in the property. If you sign the renewal to help out your ex-spouse, you will be liable for the mortgage should your ex-spouse go into default.

Separating from your spouse is hard enough without having to make sense of the legal and financial requirements not to mention the current debt issues you face.

At Welker & Associates, we offer you help through FREE consultations with our licensed insolvency trustees so you can better understand your options and get a fresh financial start.

Latest Posts

How To Survive Financially After Losing A Job

Losing a job can happen to anyone at any time. It seems like job insecurity is more of the norm these days than job security. The resulting stress can be tremendous even in circumstances where the layoff was inevitable or occurred for reasons outside of your control.

September 19, 2017

Money Management

Who will know about your bankruptcy?

Many people are concerned about who will know about the financial trouble that they are experiencing. Some people are embarrassed, while others simply aren’t comfortable sharing such information because, let’s face it, it’s really no one’s business but your own.

September 15, 2017


Why should I get a new account at a new bank?

There is nothing worse than having your bank freeze your account, taking money from your account without your permission or having your pay cheque constantly be applied to overdraft.

September 11, 2017

Money Management