519-646-2222WHAT HAPPENS TO ME IF MY EX GOES BANKRUPT?
That is a great question and one that we are often asked, the answer is “it depends”. It depends on how closely your financial lives are interrelated.
Some spouses lead completely separate financial lives each having their own incomes and credit/debt facilities as well as separate responsibility for household bills and accounts. In which case there would be no impact on you if your spouse filed a bankruptcy.
However, the majority of spouses throw in their financial stuff to a lesser or greater extent. The family house and mortgage are almost always shared even if nothing else is. Often lines of credit and credit cards are also jointly shared.
In some cases, although increasingly rare, spouses have access to each other’s credit card accounts but do not share responsibility for making the payments.
Spouses are often attracted to each other because of similarities – some studies have suggested that physical similarities such as face shape, size and shape of eyes, etc., make people attractive to each other. But there are other similarities including social stratification and education that we find attractive.
It is less likely that people from vastly different educational or income backgrounds would hook up in a meaningful way. Nonetheless, income disparity often exists between couples for a variety of reasons – including one partner opting to say home with the kids and forego their career development.
Income disparity between spouses affects the (value) access that each spouse may have to debt. One spouse with a higher income may have access to more debt facilities than a spouse with a lower income. If your spouse went bankrupt but you had separate accounts you would be relatively unscathed – but if you are joint on some debts you will continue to maintain a liability for those obligations.
If you earn a higher income than your spouse, although frustrating, you may be able to ride out having a shared responsibility for the family debt if your spouse went bankrupt. However, if your income is lower or about the same as your ex-partner’s and they have filed for bankruptcy, you may find that bankruptcy will prove to be a good option for you too.
Contact our office to review your situation and see what the best options for you. You don’t have to wait until the collectors are chasing you come in for a free planning session to weigh your options using various “what if?” scenarios.