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One of the biggest concerns for debtors who are considering filing for bankruptcy, is how the bankruptcy will affect their spouse.
Sometimes people believe that marriage automatically makes their partner responsible for their debt, but this is not the case.
For the most part, debts are the debtor’s responsibility alone. Nobody (including a co-worker, friend, family member) can be pursued for the payment. If you are ever told by a collection agency that they will come after your spouse, understand that this is only a scare tactic.
The only time a collection agency can go after your spouse is if they co-signed or guaranteed the debt.
For example, sometimes couples get each other supplementary credit cards. If your spouse has their name on the card, and they have used it, even if they did not sign the application form, they will be held responsible for the whole debt.
Bankruptcy also has the potential to have an indirect effect on your spouse. Filing for bankruptcy may prevent you from being a co-signor in the future, so if your spouse ever needs you to be one, they could be out of luck.
Matrimonial property is divided equally in a divorce. You will each get half of the value of your assets. Only the debts you have acquired together will be your joint responsibility.
The separation agreement may indicate that you have opted to each take responsibility for half the debt. However, if one spouse decides not to pay their share, creditors have every right to pursue the other for the entire amount.
If you are considering filing for bankruptcy, or have suspicions that your spouse may be thinking about it, please contact us immediately. Your financial situation will only become more and more strained the longer you wait. It is best to take care of the situation as soon as possible.
For an initial consultation free of charge, contact one of our bankruptcy trustees in Victoria, British Columbia.
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