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Is my spouse responsible for my credit card debt?

Posted on 16 February 2022

Written by Graeme Hamilton

Debt and relationships can be a challenging topic, and often the two subjects do not go hand in hand. Learning that one of you has accumulated some debt that the other may not be fully aware of is a tough pill to swallow. It is also not the easiest news to break that you owe a large amount of credit card debt. In fact, 41% of divorces in Canada are caused by money issues. Money matters vary from relationship to relationship, and each scenario will be handled differently. Some couples like to pool their finances, while others would prefer to keep them separate. The good news is that no matter how bad your debt, there is always a debt relief solution, and Spergel can help you with yours. You probably have a lot of questions – for instance, is my spouse responsible for my credit card debt? In this article, we will address specific issues around credit card debt in marriage, and who takes responsibility.

Is my spouse responsible for my credit card debt in Canada?

It is not easy if you are in a relationship where you are carrying a hefty balance on your credit cards. It may well be a challenge to tell your other half about your credit card debt, but we can help you through the sensitive process of reducing or clearing your debt when multiple parties are involved. First of all, it is important to note that spouses are not responsible for either’s pre-marital credit card debt. It is the same scenario for post-marital debt, provided one partner takes out the debt on their own, in their individual account. Should you be able to make repayments towards your independent credit card debt, there is no reason why the debt should affect your partner. Although your partner should not necessarily need to pay for your credit card debt, there are situations when this can affect them. This is if you are to stop paying towards your credit card debt. In this scenario, creditors may place a lien on your property. If your property is jointly owned, this is where issues can come about. A lien on your property means that it can be very difficult to remortgage or to sell your home.

How does joint credit card debt work in Canada?

In Canada, married couples may have joint credit card debt if they both sign an agreement that they share the responsibility equally. In many cases, lenders or creditors may ask both individuals to sign an agreement either as co-borrowers, or with one of you acting as borrower while the other is a guarantor. No matter what your role in the loan, both of you are responsible for following the fine print of the agreement. Both of you also need to ensure that you are making the appropriate repayments on time. Ultimately, this means that if one of you stops making repayments or breaks the terms, the other could be fully responsible for the credit card debt. If you do not stay current on payments, your spouse will be responsible for all of the credit card debt, not just half of it. You should remember that acting as a guarantor on a debt or loan is a huge responsibility. Be cautious, even if it is your spouse, and treat it like it is your own debt.

Can your spouse’s credit score be affected by your debt?

Your spouse’s credit score will not be affected by your debt, provided the credit card debt or loans that you have taken out are held independently, in your name only. The situation changes when it comes to any joint debts that are shared. In this scenario, if repayments are not being made, both you and your partner’s credit score will be negatively impacted. Credit bureaus will not distinguish as to whether you are the only one missing payments or not. Both of your credit scores will take a hit if neither of you keeps on top of repayments – particularly if collection agencies begin to get involved too. It is important to bear in mind that the same situation will occur if your partner is a guarantor on any debt of yours. As a guarantor, any loans could be counted as part of your credit utilization rate also – this can affect your own personal ability to take out new credit or loans.

Will my spouse inherit my credit card debt if I die?

Inheriting debt is a tough topic. What happens to your debt if you die? Is your spouse responsible for it? What if they are not aware of the debt? The good news is that in Canada, you cannot inherit debt. This means that when you die, your debt cannot be transferred to your spouse. In fact, they would only be responsible for your credit card debt if it was in their name also. Being a spouse alone is not enough justification to take on your other half’s debt. In the same light, credit card companies and collection agencies cannot contact you or pursue you for a debt that was not in your name. What you should note, however, is that credit card debt when you die becomes part of your estate. This means that creditors have a right to claim on your estate, and will want to be repaid before any inheritances are distributed. You should consider this when it comes to your loved ones – gaining debt relief through a consumer proposal or a bankruptcy can assist in reducing or clearing your credit card debt completely.

What happens to my spouse if I file for bankruptcy?

If you are considering filing bankruptcy, you may be wondering what happens to your spouse. Many people think that it will affect your spouse’s credit score, and that they will become responsible for your credit card debt. Thankfully, this is not the case. In most scenarios, your spouse is protected by bankruptcy law and does not take on accountability for your debt. There are, however, instances where this is not the case. If you are filing any joint debts, your spouse will take on complete liability. Equally, if you include any joint assets in your bankruptcy declaration, including home equity (depending on provincial exemptions), your spouse could lose this too. If your spouse will struggle to take on your debt single handedly, a joint bankruptcy may be the best option for debt relief. This means that both of you will file the bankruptcy, and none of you will single handedly be left to handle the debt. If this does not seem like an option, you may want to consider filing a consumer proposal instead in order to protect your assets.

If you have more questions like ‘is my spouse responsible for my credit card debt?’, you should book a free consultation with Spergel. Our expert Licensed Insolvency Trustees have been helping Canadians gain credit card debt relief for over thirty years. We will review your financial situation and advise you on the best way to clear your credit card debt and protect your spouse. Reach out today – you owe it to yourself.

Graeme Hamilton

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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