Can I Claim Bankruptcy Without Affecting My Spouse?
In the world of financial distress, one question often arises – Can I claim bankruptcy without my spouse? In this article, we’ll explore this query in depth, investigating the implications of personal bankruptcy on your spouse, the potential issues it might cause, and how to protect your spouse from your financial decisions.
Understanding Bankruptcy: The Basics
When individuals or businesses find themselves unable to repay their debts, they often turn to bankruptcy – a legal procedure designed to provide relief from debts. In the context of Canadian law, this process is governed by the Bankruptcy and Insolvency Act (BIA).
Bankruptcy effectively halts all proceedings by creditors, stopping them from pursuing further actions. This pause can buy you time to organize your affairs or delay repayments. However, declaring bankruptcy is considered a last resort and it’s always recommended to seek advice from a Licensed Insolvency Trustee before proceeding, as there may be other, more suitable solutions available.
The Individual Nature of Bankruptcy
Contrary to popular belief, in Canada, if you are married and declare bankruptcy, it doesn’t automatically affect your spouse. You are solely responsible for your debts. Your spouse only becomes involved if they have co-signed or guaranteed a loan in your name.
Potential Pitfalls: Joint Debts
If you file for personal bankruptcy without your spouse, the only debts that become a joint problem are those that you share. Co-signed or spouse-guaranteed debts are a shared responsibility, and if you file for bankruptcy, your spouse will be liable for these debts.
It’s crucial to note that your spouse is only responsible for debts they have agreed to, not merely because they are married to you.
Credit Cards: Joint and Supplementary
Joint credit cards represent an agreement between you and your spouse to repay any incurred debts. If a situation arises where one spouse can’t make repayments – due to disappearance, death, or inability to pay – the responsibility falls on the other spouse.
On the other hand, supplementary credit cards – additional credits added onto existing ones – are frequently used by spouses. These can be a significant source of debt. If you’re concerned about this, a conversation with your credit card company might offer some clarity. If they can’t divulge information due to your spouse not being the account holder, it’s a good sign that your bankruptcy won’t affect them.
Shared Property: What Happens?
Many couples jointly own property. If such property makes the bankruptcy exemption list, then they can’t be seized and sold.
However, if a non-exempt or highly valuable item is owned by both of you, it’s likely to be lost in the bankruptcy process. If you file for bankruptcy without your spouse, 50% of the proceeds from selling the item go to your trustee, while the remaining 50% goes to your non-bankrupt spouse.
Protecting Your Spouse During Bankruptcy
If you’re worried about your personal bankruptcy affecting your spouse, consulting a Licensed Insolvency Trustee specializing in debt relief solutions is advisable. They can provide guidance and suggest alternatives to filing for bankruptcy.
With companies like Bankruptcy Canada offering debt solutions and advice, you’re not alone in your struggle with debt. More information about their bankruptcy service is available here. You can also contact them to speak to a team member.
In conclusion, while you can claim bankruptcy without directly impacting your spouse, the process might still indirectly affect them, especially if you have joint debts or shared property. Therefore, it’s vital to seek professional advice before making such a significant decision.
