As long as your debts belong solely to you, then claiming bankruptcy should have no impact on your spouse or their credit rating, but sometimes the answer is not quite that simple.
If your spouse has not co-signed or guaranteed any of your debts then those debts belong solely to you.
However, if they have underwritten any of your debts, those debts are no longer just yours and your spouse will become fully liable if you file for bankruptcy.
There are other factors to consider as well.
Supplementary credit cards are very common among spouses.
A supplementary credit card has the same account number as the primary credit card. So, if your spouse has used a supplementary credit card with their name on it, they will be considered jointly responsible for all debts accumulated under that credit card account.
This means that if you – as the primary card holder – claim bankruptcy, your spouse will be liable for all the debt accumulated, regardless of whether or not they signed the initial credit card application form.
In the province of Ontario when you get divorced, all matrimonial property is split between the husband and wife. However, with joint debts if you get divorced the debt is not split and you both remain equally responsible to ensure all debts are fully repaid.
In fact, even if you have a legal separation agreement which states that each person is to assume half of any joint debts this will not release you from your spouse's portion.
The reality is, each of you cannot owe half of any joint debt and it is not a 50/50 split. As soon as one party defaults on their payments, or claims bankruptcy, then a creditor can legally pursue the other spouse for all amounts outstanding.
For more information please contact one of our Ontario bankruptcy offices today. We offer a free, no obligation consultation. One of our trustees will personally review your financial situation and explain all of the different Ontario debt management options.
We can help you to regain control of your financial situation, simply contact us today.