When British Columbia couples consider divorce, it might be a good idea to sit down and discuss how mutual debts will be handled before the divorce is finalized, rather than waiting to face the consequences afterward. With agreements regarding the division of property in place, those issues will not be left to the discretion of the court. In divorce, debts will be treated in the same way as assets.
However, creditors are not interested in a couple’s marital status, and regardless of what a family law court orders, banks hold responsible those in whose names the debts are registered. When a marriage ends, and one spouse moves out, there’s typically less income to meet expenses such as rent, utilities, grocery costs and more. One spouse may be left with the cost of maintaining the family home, while the other could have the additional burden of child and/or spousal support. This may lead to an inability to keep debt payments current.
It is often advised that couples should close joint accounts and open personal accounts before the divorce gets underway, but they may not be able to settle the outstanding balances to enable them to close certain credit card accounts. Although a divorce will physically separate a couple, debts may keep them connected for some time. One option may be to apply for two separate bank loans to settle debts before the divorce, but only if both parties can afford the loan payments that will follow.
Any British Columbia individual who is heading for a divorce can find an attorney who can provide valuable advice along with support and guidance throughout the process, including the division of property. If the debt level is excessive, the possibility of filing for bankruptcy might be considered. This may allow the person to have a fresh start — both financially and personally.
Contact Laughlin & Company Attorneys if the division of property is a concern for you.
Source: globalnews.ca, “Heartbroken and bankrupt: Why divorce can destroy your finances“, Erica Alini National, April 17, 2017
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