When a couple first says “I do” a new family is created. There is a new sense of hope and promise for the future. However, we all bring our own issues to the table when starting a new life with someone else and financial troubles are no exception. In fact, debt is listed as a source of conflict for at least 37% of married couples.
Many people are under the assumption that when they get married, all debts become the shared responsibility of both partners. But is it really that simple?
Spousal Debt in British Columbia
It is important to note that the rules surrounding spousal debt differ from country to country and province to province, so before making assumptions based on what you’ve heard from friends or on TV, be sure to check the facts in your local area. For example, in the province of BC, creditors can only collect a debt from the person who signed for it.
In other words, if your spouse came into the marriage with a lot of debt, or accumulated more debt on a personal account, it doesn’t automatically become joint debt. It will, however, affect your ability to jointly apply for a loan or a mortgage.
Can One Partner File for Bankruptcy?
Yes. If one half of a married couple has a significant amount of debt while the other is relatively debt-free, filing for bankruptcy will only affect one partner. This is true as long as the partner who is not filing for bankruptcy has also not been a co-signer on any of the loans or credit cards.
Filing for bankruptcy will not affect your spouse’s credit rating. In fact, if one partner is responsible for the majority of the debt, and especially if it was accumulated prior to the marriage, it might make good financial sense for one partner to individually file for bankruptcy. Of course, we say this with the caveat that no two cases for bankruptcy are alike, and working with a Licenced Insolvency Trustee (formerly known as a trustee in bankruptcy) is the best way to ensure you’re taking the right steps for your family.
Money woes are one of the main causes of marital stress, especially when there is a discrepancy in the attitudes surrounding savings and debt. Working with a licensed bankruptcy trustee to make a financial plan for the future can help save your money and your relationship! Contact us today to get started.