519-646-2222ÔTIL DEBT US DO PARTÉ
Yes, it’s the old story, made into a TV show of the same name. Marriage breakdown and debt problems are definitely common bedfellows.
When people separate there are many considerations that must be discussed with their legal counsel from custody and access issues to the division of property and financial responsibilities which often means the payment of child or spousal support.
Issues can be more complicated than they really need to be because when marital breakdowns do occur communication has already become very strained. One side refuses to cooperate with the other each vying for the best, least financially painful, position they can get.
Sometimes out of little more than spite one party may cease making payments on a line of credit or a credit card believing that since the other person racked up the debt it is their primary responsibility. And that is precisely where the real trouble begins.
The parties to a separation or a divorce are simply the two spouses – lenders are not parties to any grievances between the couple and they are rarely parties to any settlements or agreements either.
If you separate from your spouse and s/he agrees to take full responsibility for a line of credit the agreement is only between the two of you and the not the lender. Accordingly, the lender can pursue either or both of you for repayment. If one spouse declares bankruptcy or files a proposal, even if there is a separation agreement in place to the contrary, the lender can, and mostly likely will, pursue the other spouse for payment of the debt. The bankruptcy or proposal, most of the time, will trump the separation agreement.
If you are in a precarious financial situation and faced with a marital breakdown consider including a Licensed Insolvency Trustee in your planning discussions.