If you find yourself swallowed by unmanageable debt, whether it is accrued from loans, starting your own business, extravagant purchases or renovations to your home, you may be considering declaring bankruptcy. Filing for bankruptcy will not give you a clean slate but it can relieve you of your debts. Generally, your bankruptcy does not effect a spouse or partner in any way however there are a few things to keep in mind.
Your co-signer is liable
If your spouse cosigned or guaranteed a loan on your behalf and you are declaring bankruptcy, they could be responsible for paying the outstanding liability once you have filed for bankruptcy. Since the debt is incurred jointly, your cosigner/guarantor has to deal with it when you cannot. This means it is important to tell your trustee about any possible cosigners or joint debts before you file your bankruptcy so that this can be thoroughly discussed and taken into consideration when deciding on your best option.
Sponsorship will have to wait
If you are looking to sponsor your spouse so that they can easily immigrate to Canada and you are in the bankruptcy process, it will delay the entire sponsorship procedure. You will need to wait until you have been discharged from bankruptcy before you can begin the sponsorship of your spouse however it is important to note that having high outstanding debts could also hinder this process. You are normally in bankruptcy anywhere from 9 to 36 months. If you are looking to sponsor your spouse so they can come to Canada make sure you discuss the situation with your trustee as their may be other options what will allow your to sponsor and clear up the outstanding debt such as a proposal.
Moving into the Future
Although in most ways your spouse is not affected if you file for bankruptcy it is often important to discuss the process with them as there may have been many related household issues that have led to your current debt situation and they may have question about a bankrupt’s implications for your future. Best of all, a spouse or loved one can be key to helping stay on track because careful household budgeting and open discussions about financial concerns can help any family transition from bankruptcy into a successful future without the cloud of debt.
If you have questions about the process or need more information about how it will affect your spouse, feel free to contact us. We’re here to help with any financial issues you may have.