When meeting with couples or soon to be couples, I am often asked if the debts of one will impact the other, if the one with the debts files for bankruptcy.
This is often the situation when couples are just starting out and one has debts from prior to the relationship that they are paying.
Simply, your debt is yours and yours alone. You only share the debt with someone if they share the debt with you jointly, have co-signed for the loan or have an extra or in many cases a supplementary credit card. So just because you are married or common-law with someone does not mean that there is a financial relationship and you share or are responsible for the other person’s debts. Thus, there should be no effect on your spouse’s credit if you have no financial relationship with respect to debts.
The one area of impact that does come up, is in the case of a bankruptcy by one of the parties. One duty for the bankrupt person is to file a monthly income and expense statement that indicates not only the bankrupt’s income or take home pay, but also the total household income. To verify this information the trustee must also get any paystubs or income information from all members of the household, not just the bankrupt person. This is so the trustee can determine if there is any surplus income for the household that will then result in a surplus payment by the bankrupt.
This is a complicated calculation, and if you go bankrupt your spouse’s income has only a very minor impact on your payment, so feel free to e-mail a question or contact our nearest bankruptcy office for full details.