Tips For Dealing With Debt During A Divorce
In Alberta, the Family Property Act governs the division of the property (and debts) acquired by a couple during their marriage. This regime applies to both secured debt, such as a mortgage or a vehicle loan, and unsecured debt, such as that associated with credit cards. It applies both to debt in joint names and debt in the name of one spouse alone. For more information on dealing with debt during a divorce, contact our Edmonton family lawyers.
How Are Debts Treated During a Divorce?
In general, assets and debts acquired by the couple during their marriage are divided equally by the parties. Each party will add up the value of their respective assets and debts and the spouse with the larger sum will be required to make an equalization payment to the other spouse.
Certain assets are excluded from division, such as gifts from third parties and inheritances. A debt acquired by one party prior to the beginning of the marriage may be excluded from property division, depending on the circumstances.
Division of assets and debts can be affected by agreement between the spouses or by Court order in cases where the spouses cannot agree. If done by agreement, the parties can choose whichever date makes the most sense to value their assets and debts. The Court typically divides assets and debts as of the date of trial. However, in circumstances where one party has taken on debt for personal reasons after the separation and before the trial, that amount will typically not be divided equally between the parties.
Your Creditors Do Not Care About Your Divorce
The creditor or lender will seek payment for debts from the person or persons who owe the debt. If your name is attached to a loan or credit card as a borrower, the creditor can seek payment for the full amount of the loan for you, regardless of whether your ex-spouse may ultimately be responsible for half of the amount.
Tips for Managing Debt After Separation
The following tips can help you prepare for a divorce and make it through without drowning in debt:
- - Don't put off dealing with the division of assets and debts! There are limitation periods to worry about (after a certain length of time, you may no longer have a claim for an equalization payment from your spouse). Also, the more time that passes, the more complicated it can be to assign fair values to all of your assets and debts.
- - Get a new credit card. If you and your spouse have a joint credit card, you and your spouse should cancel it and obtain separate cards. If your spouse is an authorized user on your card, you will need to remove them.
- - Similarly, consider whether any debt in joint names can be increased unilaterally by one spouse after the separation and take steps, if necessary, to prevent that from happening.
- - Keep track of debt accrued after the separation, and what the funds were used for.
- - Keep in mind that it may not be possible to extricate your finances from those of your spouse immediately following your separation.
Contact Our Edmonton Family Lawyers Today for a Consultation
Divorce can be challenging enough without the additional financial and emotional stress of dealing with the division of debt. Ideally, both parties would collaborate on a mutually satisfactory solution, but it can often happen that one ex-spouse may leave the pressure of their debts on the other. Whatever your specific circumstances, our Edmonton family lawyers are ready to answer your questions and see if we might be of help to you. Contact us today and book a consultation to talk through the specifics of your divorce.
*Please note that this article does not constitute legal advice, and is intended as a general overview of a legal topic in the area of family law. For legal advice, contact an Edmonton family law lawyer.