Am I Responsible For My Spouse’s Debt In Canada?

Maintaining a high credit score and a low debt-to-income ratio can be difficult and stressful. It can be even more stressful if a spouse has taken on more debt than they can afford, either before your marriage or during.

If you’re worried that your spouse’s spending habits may affect your credit rating or personal finances, keep reading. In this article, we’ll answer the questions:

• Am I Responsible For My Spouse’s Debt In Canada?
• Am I Liable For My Spouse’s Tax Debt?
• Am I Responsible For My Spouse’s Credit Card Debt?
• Am I Responsible For My Spouse’s Student Loans?
• Am I Responsible For My Spouse’s Debt After Separation?
• Is A Spouse Responsible For Debt After Death In Canada?

If you or your spouse have considerable debt that is starting to become a burden, we’ve also included a section below on how to overcome this debt and lower the monthly payments associated with it.

Am I Responsible For My Spouse’s Debt In Canada?

Unless this is a debt you have taken on jointly, you are not personally responsible for any debts your spouse has incurred. This is true of debts they have incurred before and during your marriage.

Examples of debts you may have taken on jointly include any debts you have co-signed for or any debts you signed on to jointly—the most common being lines of credit and personal loans. If you haven’t signed your name onto your spouse’s debt, you’re not responsible for it.

Am I Liable For My Spouse’s Tax Debt?

No. Whether this is an income tax debt from before you were married or one they incurred during your marriage, you are not responsible for your spouse’s individual tax debt.

Am I Responsible For My Spouse’s Credit Card Debt?

No. You’re not responsible for the credit card debt your spouse owes, even if it was acquired during your marriage.

You would only be responsible for debt your spouse has accumulated on a credit card you have co-signed for or a credit card you opened jointly with them.

Am I Responsible For My Spouse’s Student Loans?

No. Unless you have co-signed for their student loans, you’re not responsible for your spouse’s student loan debt. This includes the debt on student loans that were acquired during your marriage.

Am I Responsible For My Spouse’s Debt After Separation?

The only debt you are responsible for after separation or divorce is your own personal debt and the debt you have accumulated jointly with your spouse. This joint debt could be a mortgage you both took out together or overdraft fees on a joint bank account. 

Otherwise, you are not responsible for your spouse’s personal debt while married or after a separation or divorce.

It is worth noting that while you may have a separation agreement/divorce order that discusses the separation of debt and who is responsible, the bank is generally not bound by this agreement/order if it says that a joint debt is to be the sole responsibility of you or your ex-spouse.

Is A Spouse Responsible For Debt After Death In Canada?

No. Generally speaking, a person’s debt cannot be inherited after death, including by a spouse. If you had joint debt together or co-signed for a loan for them, you will be solely responsible for that debt after they have passed on.

That being said, if your spouse passed on, leaving debts and recoverable assets, those assets may be used to pay off the debts. This is a complicated scenario, and we cover it in more detail in this blog titled, “Can I Inherit Debt After Someone’s Death in Canada”.

What if My Spouse or I Have Debt We Can’t Afford to Pay?

Even if you’re not legally responsible for paying your spouse’s debts, those debts can still be a burden on you. If you or your spouse has accumulated unmanageable debt, an insolvency proceeding, such as a consumer proposal or bankruptcy, may help.

Either of these insolvency proceedings can reduce the principal payments on unsecured debt, sometimes by up to 70%. And in many instances, they can completely wipe out the past, present, and future interest payments on this debt.

These debt relief options work on reducing unsecured debt, including:

• Credit Card Debt
• Payday Loans
• Income Tax Debt
• School Loans (if the debtor has been out of school for more than seven years)
• Overdue Utility Bills

A consumer proposal or bankruptcy can be entered into jointly or individually if you’re married. In most cases, a married person entering into one of these insolvency proceedings individually will not affect their spouse.

How Will My Spouse’s Insolvency Proceeding Affect Me?

If you have no joint debts together and have not co-signed for any loans for your spouse, then them filing a consumer proposal or bankruptcy proceeding will have no negative impact on you.

If you have unsecured debt you share, such as a car loan you took out together or debt on a joint credit card, you will be solely responsible for that debt after your spouse’s insolvency proceeding has been accepted.

Will My Spouse’s Poor Credit Rating Affect Mine?

While a consumer proposal or bankruptcy proceeding is an effective tool for relieving burdensome debt, it does come with a disadvantage: a lower credit rating. Unfortunately, these proceedings could be on the credit report of whoever filed for the insolvency proceeding for up to 6 years.

Your spouse’s debts and poor credit ratings are their own, and unless you co-signed the loan documents, neither of them should affect you.

Am I Responsible For My Spouse’s Debt In Canada? – Our Conclusion

As you can see above, it’s very unlikely you would ever be responsible for any debts that your spouse has incurred on their own. This is true of their credit card debt, tax debt, school debt, or even the individual debt they leave behind after they pass. If you haven’t signed or co-signed loan documents, you’re not responsible for the debt that comes with them.

If you or your spouse would like to discuss your debts and how we can help you lower them, feel free to set up a free consultation with us. We’ll go over all the debt owed and devise a plan to make the monthly payments on those debts considerably more affordable.