Does your spouse or former spouse want to declare personal bankruptcy? Are you afraid of the impact that might have on you? Here are a few situations that might concern you.
You might have joint debts with your spouse or even with your former spouse, such as
- unpaid amounts on credit cards,
- lines of credit, or
- loans with a financial institution that you signed together.
In these situations, you are both responsible for paying the debts. This means that the creditors (people owed money) could ask you to pay them if your spouse or former spouse goes bankrupt.
If you can’t pay, you can decide to go bankrupt at the same time as your spouse or former spouse. You can also try to find another solution by consulting a trustee in bankruptcy.
If you have an account together with your spouse or former spouse (called a “joint account”), the trustee in bankruptcy must determine what portion of the money in the account belongs to you.
The trustee cannot use this part of the money to repay the debts of your spouse or former spouse in connection with his or her personal bankruptcy.
If the money in the account that belongs to you is given to the bankruptcy trustee anyway, you can challenge this by proving that it’s yours.
If you have furniture that belongs to both you and your spouse or former spouse, the trustee in bankruptcy must determine what portion of the value of the joint furniture belongs to you. He cannot use this portion to pay the debts of your spouse or former spouse.
But if the furniture belongs completely to you, it cannot be used to repay your spouse or former spouse’s debts as part of his or her bankruptcy.
If furniture that belongs to you partly or completely is given to the trustee anyway, you can challenge this by proving that it’s yours or that a portion belongs to you.
If you co-own a house with your spouse or former spouse, you can normally prevent it from being sold by paying the trustee in bankruptcy a sum of money.
This amount is called the “equity” and it is determined by the trustee. It takes into account, among other things, the value of the house and the amount left to pay on the mortgage.
You must pay the equity to avoid the house being sold in your spouse or former spouse’s bankruptcy.
Since each situation is different, don’t hesitate to contact the bankruptcy trustee in charge of the file as soon as you learn that the house could be sold.
In the case of bankruptcy, your former spouse must continue to pay any support payments for you and your children. According to the law, a person cannot get rid of this type of debt by going bankrupt.
Also, if your former spouse owes you “arrears” of alimony, that is, there are some past support payments that weren't made, you can claim them as part of your spouse's personal bankruptcy since they are a debt owed to you.
This article explains in a general way the law that applies in Quebec. This article is not a legal opinion or legal advice. To find out the specific rules for your situation, consult a lawyer or notary.