It’s difficult to separate finances from relationships and when you get married, it’s likely that you and your spouse will share all of your finances.
Money issues are one of the most common causes of relationship breakdowns as well, so it’s important that you understand how your partner’s finances affect you.
One of the most common questions that people have is about bankruptcy when married and how you will be affected if your spouse files for bankruptcy.
If you or your partner have a lot of debts and you are concerned about the prospect of bankruptcy, this article will tell you everything you need to know about bankruptcy when married, as well as some of the other options that are available to you.
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Key Facts About Bankruptcy When Married
There are a lot of misconceptions about what happens to your personal finances when a spouse files for bankruptcy.
These key facts should clear up some of the big questions that you have.
You are not responsible for your spouse’s debts
Many people assume that you are automatically responsible for your spouse’s debts once you get married, but that is not the case.
However, if you separate, that may make you liable under The Family Law Act as your debts are divided equally, regardless of who borrowed the money.
You are not usually liable to pay debts if your spouse files for bankruptcy
However, if you have a co-signed or joint debt, your liability will remain the same and you will need to pay the debt.
You do not have to file for bankruptcy if your spouse does
One of the biggest misconceptions about bankruptcy when married is that you both have to file because your finances are intertwined.
However, that is not the case at all and if you are in financial trouble, it’s up to you how to handle it.
One of you can file for bankruptcy or you can both file should you choose.
Your credit rating will not be affected
Filing for bankruptcy will have a big impact on a person’s credit rating, but if your spouse files, it will not make any difference whatsoever to your score.
Consumer Proposals When Married
Although bankruptcy when married shouldn’t affect both parties, it may still be best to look for alternatives.
Consumer proposals are an effective debt relief option that does not require you to hand over any assets.
Instead, you agree on an amount to repay to your creditors and the rest of the debt is written off.
People are often concerned about the impact that their spouse taking out a consumer proposal will have on their finances.
But there is no need to worry because the rules are the same as they are for bankruptcy when married, so you should not be affected.
If you or your spouse have a lot of debts and you want to know more about consumer proposals or bankruptcy when married, get in touch today and we can answer all of your questions.
You can reach us on the phone or fill out an evaluation form and we will get back to you.
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