Preparing for divorce in Canada: financial actions you need to take

Posted on 7 December 2021

Written by Graeme Hamilton

Divorce is one of the most stressful circumstances any of us can go through in life. Sadly, with 4 out of 10 marriages ending in divorce in Canada, the amount of divorces is only set to increase. As well as being an extremely emotional situation, there is an awful lot to think about too. Perhaps children are involved, as well as property and other assets you need to decide on how to split with your ex spouse. Despite everything that is going on, it is so important to review your financial circumstances as there are decisions to make when preparing for divorce. In this article, we share our top tips on preparing for divorce financially in order to make the process as straightforward as possible.

Organize your finances

Knowing where to start with your finances can be one of the most difficult aspects of preparing for divorce. Often, one spouse is more involved in the finances than the other, so neither of you want to be in the dark when it comes to divorce. For this reason, you need to organize your finances and get them in control. The first way to do this is to collect any financial records and ensure you have a copy of everything. This should include all bank statements, credit card statements, mortgage statements, loan applications, and so on. This will help you gain clarity on your financial situation, contribute to getting a fair split in your divorce, and stand you in good stead for building your own credit report.

Separate your finances

Throughout your marriage, yours and your spouse’s finances have probably been closely linked. No matter whether or not you had a good credit score with your ex spouse, you need to separate yourself from this history and begin to build your own individual credit score. There are several actions you can take in preparing for divorce:

  • For any joint accounts, switch the payments to your name only or freeze or close the accounts
  • Sell any joint assets, including your car or house. Ideally, any division of assets will be determined by you and your spouse, but if the divorce is not amicable, a divorce lawyer may need to decide for you
  • Open an individual bank account and apply for your own credit card
  • Create a budget for how much you will need to live independently
  • Book a free consultation with a reputable Licensed Insolvency Trustee if you are worried about your financial management or debt

Learn more about how debt gets split during divorce.

Take stock of any assets

Part of preparing for divorce is figuring out what to do with yours and your ex-spouse’s joint assets. This is usually establishing how they need to be split or separated, as well as considering any debts either of you may have accrued. The best way to start is to make a list of all of your assets, including any property, cars, jewellery, furniture, businesses, and so on. In some cases, it may be simple to divide and share these. In others, it may be more appropriate for one of you to buy the other out. The same logic needs to be applied to debts and taxes. Where possible, you should pay any taxes and minimum payments until you decide how best to separate these. This prevents any further consequences like collection calls or a wage garnishment while you wait. In some cases, the decision on how to split debts may need to be made by the courts. If you are worried about being unable to pay any debt, you should speak to a Licensed Insolvency Trustee and be sure to take a copy of any notices of assessment.

Keep a copy of all important documents

It is really important that when preparing for divorce, you create a copy of any important documents. This includes any pension plan statements, wills, insurance policies, business statements, bank account statements, tax returns, and so on. Although a laborious task, it could help you in a number of ways. First of all, it will help you – and potentially a Licensed Insolvency Trustee – to clarify what is yours, and identify any debts you may need to repay. As you are going through a divorce, it is also likely that you and your ex spouse are having some disagreements. For this reason, it is important to record financial activity and to have evidence at your disposal. This can certainly be useful, particularly if your divorce becomes contentious, court proceedings need to take place, or if your financial situation needs to be assessed.

Ensure your spending is in check

No matter the temptation to rack up credit card debt using a joint card with your ex spouse, this is not a good idea. In fact, there has been no more crucial time to stay on top of your finances than when preparing for divorce. Creating joint debt could make your position a lot worse, and put your situation at stake when it comes to the separation of assets and debts. Racking up any individual debt or making impulsive purchases could have consequences for you too. If you want to make large purchases, it is best to wait until your divorce has been finalized and you know your final financial position.

Speak to a reputable Licensed Insolvency Trustee

Divorce can go a number of different ways, so it is always good to be as well informed about your financial rights and responsibilities as you can be. In preparing for divorce, you may even be worried that you have too much debt to divorce. A Licensed Insolvency Trustee can help you with all financial and debt issues related to divorce. They are crucial in helping you to get a financial divorce plan in place, and protecting your rights around debt. There are plenty of financial laws and debt guidelines that you may not even be aware of. A reputable Licensed Insolvency Trustee will guide you through the financial processes of divorce and help to find a solution for any debts you may have. If you are preparing for divorce in Canada, Spergel will assess your financial situation and help you to manage any outstanding debts so that you can work towards a fresh financial future.

If you are preparing for divorce and worried about debt and financial management, book a free consultation with a reputable Licensed Insolvency Trustee at Spergel. No matter what your financial situation, our experienced trustees have been helping Canadians gain debt relief for over thirty years. We will walk you through the entire process of gaining debt relief. Contact us today – you owe it to yourself.


Graeme Hamilton

Graeme Hamilton is a Chartered Insolvency and Restructuring Professional with over 10 years’ experience as an LIT (Licensed Insolvency Trustee). He is also Spergel's resident expert on bankruptcy and debt relief in the Ontario region. Prior to establishing his career in the insolvency industry, Graeme lived in Cambodia doing volunteer work with NGO's.

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