Relationship Debt: What Happens if You Split?
When a relationship ends, particularly in jurisdictions like British Columbia, relationship debt can complicate matters. It’s imperative to understand how these debts are divided to protect your financial future. Let’s delve into it.
Understanding Relationship Debt
Whether you’re married or in a common-law relationship, any debts incurred during the course of your union are typically shared. This concept is known as relationship debt.
Just like the love you shared, the debt you gathered together also needs to be dealt with when you part ways.
Qualifying Relationships
In Canada, the rules apply to both married and unmarried couples who have lived together for at least two years in a marriage-like relationship.
Married Couples
If you were married, you have two years to apply to the court for the division of property and relationship debt after a divorce is filed.
Common-Law Couples
For those in a common-law marriage, characterized by living together for two years or longer, the application must be made within two years of separation.
Dividing the Debt
Dividing debt doesn’t necessarily mean splitting it down the middle. Here’s what you should know.
Shared Debts
Any debts taken during the relationship are usually divided equally. For instance, if a $10,000 student loan is taken when you’re married, your partner should technically pay half of that debt upon separation or divorce.
Preventing Unequal Debts
To avoid paying debts your partner incurs, you can create an agreement to divide those debts unequally. This agreement can be made when you’re living together and must be signed by both parties in the separation agreement or prenuptial agreement.
Always remember that debt collectors can seek compensation from anyone who signed onto a new debt.
Dealing with Relationship Debt: A Table Representation
| Type of Relationship | Time to Apply for Division of Debt |
|---|---|
| Married | 2 years after filing for divorce |
| Common-law | 2 years after separation |
Securing Your Financial Future
Divorce or separation can be emotionally taxing, but it’s crucial not to overlook the financial implications, particularly relationship debt. An understanding of how debt is divided can protect you from future financial woes.
In Conclusion
When you split, dealing with relationship debt is as important as dealing with your emotions. Understanding the rules and making smart decisions can help you secure your financial future.
