Debts and relationships: What’s the risk for spouses?

You’re worried because your spouse is having major money problems. It’s normal for this to be stressful. That said, you’re not necessarily responsible for their debts, even if you share a life together. To give you a clear view of what you should know, we’ve compiled a number of common questions.

Summary

Your spouse’s personal debts are not yours. You only share your joint debts.
There are solutions, regardless of what you and your spouse are facing. Bankruptcy isn’t the only way.
Money can be a source of tension in relationships, especially if one of the people in the relationship has debt problems. In any event, the important thing is to be able to talk about it. And to be well informed.

If I’m married or in a common-law relationship, am I responsible for my partner’s personal debts?

No. Each person in a relationship is responsible for their own debts. Personal debts stay personal, even if you’re in a common-law relationship or married. Your credit card and car loan are usually personal debts, for example. Be careful, though, as you can become responsible for the debt if:

You become a guarantor by signing a guarantee for your spouse’s debt
You co-sign the contract as a co-borrower

What about our joint debts?

Here’s how it works. If you borrow together, this means you have incurred debt together (for example, when you get a credit card in both of your names). In this case, you are both responsible for the debt. This means if one of you declares bankruptcy or can no longer pay, the other will have to pay back the entire debt that you incurred under both your names.

In other words, even if your spouse spent too much on your joint line of credit, the debt belongs to you both. Using the legal terms, you are jointly and severally liable.

If my partner and I live together as a couple (common-law or married), do I become responsible for my partner’s debts?

The straight answer is no. Living with a partner, whether you’re married or not, does not make you responsible for the personal debts of the person you’re building a life with! If they have poor credit, this doesn’t at all affect yours. There are a number of factors that influence credit score, but marrying someone in debt isn’t one of them!

That said, if your new spouse has a poor payment history, this can complicate things if you want to borrow together, such as to take out a mortgage to buy a home.

My spouse is declaring bankruptcy. Do I have to file for bankruptcy as well?

Rest assured: This does not mean you will be forced to declare bankruptcy. In the case of bankruptcy, a consumer proposal or debt consolidation, the following rules apply:

If your debts are not joint debts, it does not affect you. You are not responsible for your partner’s personal debts.

However, if you have joint debts (like a loan in both your names), you become responsible and it’s up to you both to pay them. Joint debts don’t go away and cannot be negotiated with creditors if one person in the relationship goes into bankruptcy.

If your joint debts are too high for you to pay back on your own, you can always file a consumer proposal or start over with bankruptcy as well.

Advice for when someone close to you has debt

Your friend, girlfriend or dad is overwhelmed with money problems? The golden rule: Approach the subject gently and without judgment. Also avoid inserting yourself into the situation. It won’t be productive to say things like “I don’t know what I would do if I were you.” What your friend, partner or family member needs to understand is that there are solutions to their problems.

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