As a general rule if you file for bankruptcy in Canada it does not directly affect your spouse. What you will find is that your debts are yours and yours alone. However, there are some instances where your spouse may be affected.
If your spouse has co-signed, or guaranteed a debt for you
If, for example, you and your spouse have a joint (or cosigned) credit card, you each gave your commitment that the credit card will be paid in full, regardless of what happens to the other party. So if one spouse should disappear, refuse to pay, pass away or file for bankruptcy the other spouse is still responsible for that debt, in full. If you file for bankruptcy and your spouse, or anyone for that matter, has cosigned or guaranteed a debt for you they will likely be pursued by your creditor to repay that amount.
If you and your spouse own property together
It is not always a problem if you and your spouse own property together. If all the property you and your spouse own jointly falls within the bankruptcy exemption limits set by your province then you don’t have to worry. However, if you own property that is over and above these exemptions, then your portion of these assets may have to be sold as part of the bankruptcy. This would clearly impact your spouse.
For example, let’s say you and your wife owned an old RV that was worth $10,000 in the current market. This would be an asset that does not fall within the provincial bankruptcy exemptions and is lost as part of the bankruptcy. If you filed and your spouse did not, then the RV would need to be sold and 50% (or in this example $5,000) would be paid to the bankruptcy trustee and $5,000 would be paid to the non-bankrupt spouse. Although in practice we find most people don’t have to sell any assets in a bankruptcy, it is important to understand the circumstances that this may become an issue.
For the most part your debt is separate from your marital status, as is your bankruptcy. However, the best way to determine if your spouse is in a position where they would be impacted by your bankruptcy is to meet with a trustee. If you are resident of Edmonton or Northern Alberta I would be happy to discuss things with you directly. You can always get in touch with me at 780-435-5110 or through my for Goth & Company website.
After a quick examination of the type of debts you have and the nature of the assets you own your trustee will be able to identify any risks and explain exactly what your spouse can expect. So my recommendation, contact a local trustee. There will be no cost or obligation associated with simply asking questions and then you will have a qualified opinion that is based on the facts.