How Does Filing Bankruptcy in Canada Affect My Spouse

February 9th, 2022
How Does Filing Bankruptcy in Canada Affect My Spouse

For married couples, bankruptcy can be a complicated matter to discuss. Most of the time, you or your partner will have many questions about how filing for bankruptcy affects both your finances. If your spouse happens to file for bankruptcy, here’s what you need to know about how it can affect you and your personal debt.

Your Debt is Yours and Yours Alone

Any personal debts that you have in your name are yours alone. The same applies when your spouse files for bankruptcy. Whatever debts they may have incurred aren’t yours and will never be yours.

While many people believe otherwise, it’s important to know that a person’s debt will not become shared with their spouse once they get married. That misconception may have come from the fact that debt collection agents tell you that if you don’t pay them, they will get the money from your spouse. That’s nothing more than a scare tactic used by these collection agents. Even if creditors threaten you with that, they can only go after you for your debts.

Joint Debts 

Generally speaking, personal debts will not be shared between you and your spouse, but there are exceptions. If your spouse has co-signed or guaranteed your debt, then that loan effectively applies to them too. When it comes to joint debts, you are both responsible for paying the full balance. Even if you declare bankruptcy, your creditors could and likely would, pursue your spouse for full payment.

Credit cards typically also work the same way. Suppose you have a credit card on a bank account you share. Any debts you incur on that card legally belong to both you and your spouse. While there are cases where you’re both responsible for the balance, there are also cases when only one person is entirely responsible, and sometimes the second person is a guarantor. It all depends on the type of agreement you and your spouse have with the credit card company.

Consolidation Loans

For married couples, it’s also possible that one person or both could be in a financially difficult situation. It’s actually a pretty common occurrence. When this happens, couples may choose to combine their debts and create a joint consolidation loan to help pay for their debts easily. If you and your spouse decide to have a debt consolidation loan, then you and your spouse act as co-borrowers, making both of you fully responsible for paying off the loan.

This is when things can get a little complicated. If you or your spouse suddenly files for bankruptcy and you’re both under a joint consolidation loan, then the other will likely be held responsible for the full value.

How Does Income Come Into the Equation? 

If one, or both of you file for bankruptcy, your income will be examined to determine if and how much you pay your creditors. You need to report your own income and expenses as well as your spouse’s as long as you live together. That’s how income is calculated and considered when filing bankruptcy for married couples.


The question of how bankruptcy can affect couples in a marriage is one of the most common things couples ask their bankruptcy Trustees. It pays to know how bankruptcy, debt, income, and your assets affect you and your spouse’s finances.

If you’re looking for help with debt and your ongoing payments or if you want to review your options and learn about consolidation loans, debt management programs, proposals, consumer proposals and bankruptcies, we at Paul J. Pickering and Associates Limited are here to help you. We have over 30 years of experience in helping our clients resolve their financial problems. We specialize in debt management, proposals. consumer proposals, debt counselling and bankruptcy in London, Ontario.  Whether you’re starting to get overwhelmed and you don’t know how to handle your debts and minimum payments, contact our office today for your free initial consultation, and we’ll put together a plan that will work for you!