If you are married and need to claim bankruptcy, you may be concerned as to how your assignment into bankruptcy will affect your spouse.

If your spouse is joint on a co-signed debt, then a creditor can legally pursue your spouse for repayment of that debt even if you file for bankruptcy. The only assets included in a bankruptcy are those assets that you own. If assets are owned jointly with your spouse, then it is your potion / percentage of the assets that will be considered.

Your trustee needs to be completely aware of any joint assets that you own so that they can all be reviewed on an individual basis. Any assets that are in your spouse’s name are not affected by your bankruptcy; those assets are theirs and will remain so.

If you claim bankruptcy, your spouse does not have to. They can decide how to proceed based on their personal finances. There are times when it makes sense for couples to file jointly, and there are other times when it is more reasonable for only one partner to file for bankruptcy or a consumer proposal. This is something that should be thoroughly discussed with a trustee before moving forward with any final decisions.

When you choose to file, all of the debts that are in your name will not affect your spouse’s credit or their personal debt obligations. More importantly, your bankruptcy will not appear on your spouse’s credit report because their credit report only contains information about them personally.

If you file for bankruptcy, any debts that you and your spouse have jointly will be the sole responsibility of your spouse. Your spouse will be automatically obligated to repay that debt fully even though you are in bankruptcy. If you and your spouse have a lot of joint debts, you may consider the need for both of you to file for bankruptcy so that all of the family debts are handled.

If you and your spouse have separated or are divorced, your spouse is still responsible for any debts that you incurred during your marriage as long as you both signed the loan paperwork. For more information or help on where to go from here, contact our team today.