Impacts of the Pandemic on Couples and Debt

In Quebec, the rate of separation and divorce has significantly increased since March 2020. Many people have lost their jobs and racked up debt. What happens in the case of separation? Who pays for what? And how can you create a stable financial situation for yourself when you’re on your own?

In short

Find out about debt sharing!

The number of separations and divorces has increased during the pandemic.
Following the loss of a job or reduction of one or more incomes, debts have mounted.
In the case of separation, it’s important to be well informed about the division of debts between spouses and to know the difference between personal and joint debt.
Once separated, making a new budget will allow you to gradually wipe out debts and start over on a solid financial footing.

Don’t hesitate to ask our counsellors for help if the financial weight of the separation is too much for you to bear.

For many couples, the pandemic has upset the delicate balance that kept the relationship going. Prolonged cohabitation, lack of space to vent, reduced income and job loss have amplified existing tensions. As a result, according to family law experts, many more Quebecers have separated since the spring of 2020. It must be said that in normal times, money problems were already one of the first sources of conflict and causes of separation and divorce. So, with everything combined to create stress, it’s not surprising that they have poisoned a couple’s relationship. Even more so if one of the two partners has debt problems.

Currently, people who lost their jobs or whose business slowed down have been receiving some government support. But when this support stops, tensions are likely to rise and lead to disputes. To prevent the situation from escalating to a point of no return, it’s essential to talk regularly about money with your partner. The simple fact of having a discussion about your respective financial situations and seeking solutions together will ease tensions.

This article, Couples and Money: How to Talk About It, will help you determine the best approach to the subject.

Personal debt and joint debt

If separation is unavoidable, it’s important to know a few basic concepts about sharing debts between spouses to avoid further disputes.

First of all, it’s important to distinguish between personal debt and joint debt. Personal debt remains personal, whether you are married or in a common-law relationship. It is up to each of you to pay it back. However, some former spouses sometimes decide by mutual agreement to pay off an individual debt together.

Joint debt, that is, where you co-signed a contract as a co-borrower, must be shared between both spouses. However, if one of the spouses declares bankruptcy or can no longer pay, the other spouse will have to repay the entire amount.

For more information, consult our articles on the subject: Debts and Couples: What Are the Risks for Spouses? and Debts and Separation: How to Avoid Conflict?

The cost of living solo

When you separate, it is often difficult, if not impossible, to save money. In fact, before, you were both paying for everything, now you find yourself alone with rent, a mortgage, a car loan, etc. In addition, you may have to pay child support. You need to modify your budget. Especially considering that since the beginning of the pandemic, the cost of property has skyrocketed. Buying or renting a house on your own is much more expensive than before. The grocery bill is also higher. In short, your budget must be adjusted to live within your means.

In any case, when you separate, with or without children, it’s important to surround yourself with friends and family, but also with our financial recovery advisors and our licensed insolvency trustees who are there to help you. They will help guide you out of debt so that you can start again on the right foot.

Six actions to take after divorce

Take stock of what is yours

Make a list of what belongs to you and what belongs to you as a couple. This will show you which is personal debt and which is joint debt.

Notify the government about your separation

If you have been separated for more than 90 consecutive days, notify the federal and provincial governments of your change in status. This may affect your eligibility for certain benefits and credits.

Close joint accounts and credit cards

Contact your banking institution immediately, especially if you are on bad terms with your ex.

Update your beneficiaries

Review the names of the people you have named as beneficiaries for your pension plan or annuity, RRSP, RRIF or TFSA, life insurance, etc. Also, take this opportunity to review your will.