Bankruptcy is never an easy decision.
There are many legal factors to consider, including notifying creditors, selling and retaining assets, and stopping creditor collections if such proceedings are underway.
One of the common queries that most debtors approaching MNP Truro bankruptcy firm have is about the effect of bankruptcy on the spouse.
MNP Limited Truro, NS Licensed Insolvency Trustee
You Alone are Responsible for your Debts
In Canada, your debts are your responsibility.
Your spouse is not responsible to clear them.
If your creditors are harassing you by saying that they would go after your spouse for payments, then do not believe them.
The Canadian law does not permit such transfer of debt burden to your spouse.
Your Spouse is Responsible for your Debts if She or He is a Co-Signor
A spouse does not automatically become responsible for any of your debts.
However; if your spouse has acted as a co-signor or guarantor for your debt, then he or she becomes responsible for it.
She also becomes legally responsible to pay the debt in case you default on payments.
If your Spouse Co-Owns Assets
During bankruptcy, non-exempt assets are sold by your LIT to raise money for settlement with creditors.
If your spouse and you own assets jointly, then your share of an asset such as a property, may have to be sold.
In cases where such partition is not possible, your LIT can provide a suitable solution.
It is important to inform your LIT regarding joint assets so that a suitable decision is made.
Future Impact on Spouse’s Financial Stature
Your bankruptcy may have an indirect impact on your spouse’s financial future.
Your spouse may be unable to obtain a joint credit with you in the future.
You need to rebuild your finances to claim a new debt after a bankruptcy. So, you may not be eligible to co-sign for a debt with your spouse at a reasonable interest rate till you improve your credit rating.
Bankruptcy is also not a decision that needs to be taken alone.
Guidance by an expert, ideally a Licensed Insolvency Trustee (LIT), can help you understand the entire legal bankruptcy process, review benefits and risks that you are likely to experience, and strike the right chord with creditors.
MNP Truro bankruptcy firm has worked with thousands of debtors since its inception.
Our LITs understand the emotional stress that debtors and their family undergo due to a bankruptcy.
Therefore, our trustees ensure that both debtors and creditors get a fair deal.
Our years of experience enable us to impart crucial legal inputs to you, which facilitates timely decision-making, and reduces the risks of bankruptcy.
We also ensure that you are left with enough assets as per the Federal and local exemption laws to rebuild your life afresh.
Truro NS B2N 1G6