How To Deal With Debts in Your Separation or Divorce!

How To Deal With Debts in Your Separation or Divorce!

It’s no secret you probably facing some big debts in your separation or divorce!

Are you still responsible for these debts?  Does your spouse have to pay half of your debts now that you are getting separated or divorced?

Hi, my name is Thomas O’Malley.  I’m an experienced family lawyer in Durham Region and the GTA.

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When you getting separated or divorced, you are still responsible for your own debts.  Your spouse is not suddenly now responsible for the outstanding amount that you owe on your Visa credit card, for example.

Your spouse is also still responsible for their own individual debts.

However, if you are married, you are entitled to list the debts you owe on the date of separation on your Financial Statement.  This is really important since it lowers your net worth on the date of separation. 

Why is this even important?

This is important because the legal formula used Ontario to deal with property for married spouses is called equalization of net family properties.  Both you and your former spouse have to figure out your own net worth, that is, the value of your assets minus the total amount of your debts on the date of separation.

As you can see, a really important part of this calculation is the total amount of your debts on the date of separation. 

When you list all of your debts on the date of separation, you make sure you get a higher property payment from your spouse if they owe you a payment.

And even more importantly, you get to make a lower payment to your spouse if you must pay them a property payment, saving you usually thousands of dollars.

This property calculation does not apply to common law spouses in Ontario.

When you have a joint debt like a mortgage or line of credit, you and your spouse are both responsible for that debt.  You usually figure out what will happen to that debt in a separation agreement or court settlement.

For example, if you and your spouse are both on the mortgage and you sell your home, this mortgage is automatically paid off when the home is sold.

However, if you or your spouse buy out the other spouse’s interest in the home, this spouse will have to refinance or get a new mortgage to pay off the existing mortgage to make sure that the spouse who is selling their interest in the property to the other spouse is no longer liable to pay the mortgage on the home.

In short, when you have individual debts, you are still responsible for paying them regardless whether you are married or lived in a common-law relationship. 

However, when you are married, you must make sure you list every debt you have to make sure you get the best property payment or reduce the property payment you owe to your spouse.

If you have any questions about your separation, divorce or family law case and you would like our help, feel free to contact me on my Facebook law office page, that’s O’Malley Family Law, or call me at 905-434-8837 and I’ll point in you in the right direction. 

Click here to join my free Facebook GTA and Durham Region separation and divorce support group: GTA and Durham Region Separation and Divorce Support Group

Please make sure to share this important information and video with your friends, family members and co-workers so that it helps more people avoid serious problems in their separation or divorce before it’s too late.