Personal vs Joint Bankruptcy in Canada
Is a Personal or Joint Bankruptcy Filing Right For Me?
If you decide to file bankruptcy and you are married, your spouse does not necessarily have to file bankruptcy too.
However, there is also the option of filing a joint bankruptcy, which is an option that you might choose if you both have significant debts, whether you hold them individually or jointly.
If you have joint debts and one of you files bankruptcy, the other will be solely responsible for the debts.
In the case that both spouses want to file bankruptcy, they should decide whether it is best to file individually or jointly.
There are several factors to think about when deciding between the two.
Deciding to File Bankruptcy
Firstly, you will need to consider whether both of you need to file bankruptcy.
Even if you are filing bankruptcy or your spouse chooses to, it doesn’t mean that you both need to.
Just one of you can file bankruptcy individually to deal with your personal debts.
However, if the majority of both your debts are the same, filing joint bankruptcy could work for you.
If you want to take this option, your Licensed Insolvency Trustee must agree that it’s the best choice for you.
It is also possible for each spouse to file bankruptcy individually. This might make sense if you handle most household bills together.
When it comes to joint debts, these can affect how you choose to file bankruptcy.
If only one spouse files bankruptcy, but you hold joint debts, the other person will be left responsible for paying the debts on their own.
However, if you file joint bankruptcy or you each file individual bankruptcy, this can allow you to discharge joint debts as well as individual debts.
Other Factors to Consider
There are other things that might affect your decision to file bankruptcy individually or jointly.
Firstly, you will each be required to pay bankruptcy fees if you decide that both of you should file bankruptcy individually.
Joint bankruptcy can help you to save money because you will only need to pay one set of fees for one filing.
Filing joint bankruptcy could make things slightly more complicated, as both spouses must fill out all paperwork and carry out all of the required duties in order to be discharged.
This is also true if you both decide to file individually, but one spouse could receive their discharge even if the other doesn’t.
Joint debts that could be passed to one spouse if the other files bankruptcy could include credit cards and overdrafts on joint bank accounts.
Secured joint debts are treated differently.
It might be possible to keep the asset that the debt is secured against, but it might also be necessary for an individual filing bankruptcy to sell their part of the asset.
Another thing to consider is the state of your marriage.
If you are having marital problems, it may be smarter not to file a joint bankruptcy.
You both need to be committed to completing the process, and this might be difficult if you are having disagreements or are in the process of separating.
Bankruptcy Canada can help you to find a trustee, who can offer further advice on whether you should file joint or individual bankruptcy based on your circumstances.