(The following comments regarding the treatment of a spouse in bankruptcy and the rules for joint debts in bankruptcy and credit cards etc. are equally applicable to common law partners, family members or any other party who has cosigned your debts.)
If you file bankruptcy, your spouse will still be responsible for any joint or cosigned debts. Joint or cosigned debts include any of your debts for which your spouse has signed the original contract, loan agreement or credit card application. If your spouse has cosigned your debt or requested a credit card, they will be responsible to repay the debt or outstanding account. Unless differently agreed with the lender, the amount owed by your spouse will be the full amount of the debt, not just 50% or some other portion you may feel is justified.
In bankruptcy, your spouse will be responsible for repayment of your credit card debt if he/she actually requested a secondary card and signed an agreement accepting full responsibility for current and future debt on it.
Even if no agreement is signed, if a secondary card is issued in the name of your spouse and with the primary cardholder's number, at a minimum, your spouse can be held responsible for any future debt signed for by them on that secondary card.
Your spouse will continue to be jointly liable for a loan, credit card or other joint debt in bankruptcy unless otherwise specifically agreed to by the financial institution or credit card company. Therefore, it is important to obtain written confirmation of any agreement in this regard.
Your marriage or living relationship alone does not make your spouse or partner responsible for your debts.
However, if you are jointly liable for a debt, a separation or divorce agreement between you and your spouse does not legally bind the financial institution or creditor. This is only an agreement between the two of you. You must obtain written agreement from the creditor that the debt has been split or re-assigned to one of you.
If you have questions about the rules regulating the position of spouse in bankruptcy, we would be happy to help you: please contact one of our British Columbia bankruptcy trustee offices and arrange for a free consultation with our trustee. You can also use our online Free Case Evaluation form to describe your situation to us and to ask us any questions regarding joint debt in bankruptcy and effects of bankruptcy on your spouse.