A common question I receive from many people I see is “how will bankruptcy affect my spouse?” Many have the mistaken impression that because they are married, their spouse is automatically responsible for their debts. This is not the case. The good news is, in Canada, marriage alone does not make you responsible for your spouse’s debts.
You can only be held responsible for a debt if you have signed a contract, loan agreement or credit card application.
Therefore, a credit card account started by your spouse while they were single does not become your legal responsibility just because you’re married. On the other hand, a joint credit card account or mortgage you’ve both signed for is a joint debt, meaning both you and your spouse are on the hook and the bankruptcy of just one of you will leave the other with the debt.
If you and your spouse are separated or divorced, responsibility for debt between spouses as listed in a separation or divorce agreement does not legally bind a financial institution or creditor. Unless you obtain concurrence to the division and re-assigning of responsibility of debt from the creditor, they have the right to pursue anyone who signed on the debt.
Think of any debt that you have as your debt only and the responsibility it solely yours. Therefore if you’re preparing to file bankruptcy without your spouse, your joint debt will become your spouse’s full responsibility.
