What Happens to My Spouse During Bankruptcy?

Will my bankruptcy affect my spouse?
The most common question asked by people considering personal bankruptcy in Manitoba is what happens to spouse in bankruptcy, will he/she be affected. The answer is no. In most cases your debts are yours alone, and your husband, wife, or common law spouse will not be responsible for any of them.

I’ve heard that collection agencies will pursue my spouse for payment. Is this true?
Many people think that marriage makes your spouse automatically responsible for your debts, which is untrue. This belief typically stems from collection agencies who say they will go after your spouse if you do not pay. This is only a scare tactic; they can only pursue you for the debts.

Can bill collectors ever come after my spouse?
Yes, but only if your spouse co-signed or guaranteed your debt. For instance, if you took out a loan, and your spouse co-signed for it, if you don’t pay, the bank can go after your spouse.

I got my wife a supplementary credit card; can she be affected by my bankruptcy?
Yes she can. If your spouse has a card with her name on it, and if she has used it, even if she didn’t sign the card application form, she is still responsible for the debt. In case when there are joint debts, bankruptcy affects both spouses.

If my wife and I do not have any joint debts, is there any way she can be affected?
Indirectly, yes. If you file for bankruptcy, you may not qualify as a co-signor in the future, which could have a small impact on your wife.

What if I am divorced?
In Manitoba, if you are divorced, the matrimonial property is divided; for example, if you own a house that is worth $100,000 dollars, each of you will get $50,000. But, if you have any debts together, and you get divorced, each of you are responsible for the total debt.

What if our separation agreement says we will each pay for half of the debt?
The separation agreement doesn’t matter here: if one person neglects to pay their share of the debt, the creditor may pursue the other for the whole amount. You will not each owe half of the debt. It is a 100% split if one of you does not pay.

What do I do if I am considering bankruptcy right now?
If you or your spouse is considering bankruptcy, we suggest contacting our bankruptcy trustee in Manitoba right away. Your situation won’t get any better the longer you wait. We will give you a free consultation, and start discussing the options available to you.