In Divorce, Will I Be Responsible for My Spouse’s Credit Card Debt?

First, when it comes to a spouse’s credit card debt (or any other type of debt), you should check to see if the account is actually in the name of both you and your ex. If it is, then you can be on the hook for the full amount. You both signed an agreement with the bank that says each of you can be responsible for all the debt on the account. If you are both on the account, and your spouse is running up lots of debt, then you will want to contact the bank to “freeze” or cut off the account. Some banks will refuse to do that if both people on the account do not agree, in which case you need to speak to a lawyer. 

If your name is not on the account, then unless you fall into an almost never-used provision where your ex had to go into debt because you withheld the necessities of life, then you are not responsible for his debt. The reason that the courts never use this provision, is that it makes more sense to make you pay spousal support if you have all the money and your spouse really does need money just to eat. (For more on spousal support, listen this podcast or watch this video.) However, since you are married, you will be “equalizing your net family property” and his debt may influence that in a way that could result in you owing your ex (not the bank) half of that credit debt. Of course, your spouse’s debt will be set off against yours. And if your spouse has more assets than you, then you may not have to pay anything. To understand more about property equalization, listen to this podcast. However, even if you do not have to pay anything, you may end up getting much less than you should because of your spouse’s debt. The court will only take that debt out of the equation if your spouse ran up the debt “recklessly on in bad faith,” which some judges view as running up the debt intentionally to hurt you. So, there is no guarantee that your spouse’s debt will not hurt you financially if you divorce.

If your spouse is running up debt, and you want to protect yourself. You do have a few options, which you should discuss with a good family law lawyer:

  1. Get a marriage contract. You do not need to sign a marriage contract before you get married in Ontario. You can sign it at any time. Marriage contracts have saved a lot of marriages where one spouse gets into financial trouble. You could make an agreement that your spouse’s out-of-control debt will not be included in the property division – and will not form a basis for requesting spousal support either. Or you could specifically set out terms as to how the debt (and assets) will be divided. For more on marriage contracts, listen to this podcast.
  2. Apply to the court to divide and do the property division now – even though you are not divorcing. Section 5(3) of Ontario’s Family Law Act allows spouses to divide their property, without divorcing, if there is a danger that one of them will improvidently deplete his or her assets, or run up debt. This can protect you if your spouse does not agree to sign a marriage contract. However, you will end up in court fighting over how things will be divided and since family court can be a nasty place, there is a good chance you will end up divorcing.
  3. Plan to separate and then divorce before the financial problems get too bad. If it looks like the financial situation will be getting pretty bad, you should speak to a divorce lawyer about planning your separation in order to avoid some common family law mistakes. You may want to watch this video on the first steps to take when considering separation, listen to this podcast, or read this page.

Another excellent way to plan what you should do next is to pick up a copy of this easy-to-understand best-selling book on the basics of Ontario Family Law. It discussed these issues, property division, support, separation and your options, in and out of court, in more detail.

If you would like to discuss your situation and your options with John Schuman, then please use the form below. You can also use that form to provide comments on this page. If you found this page helpful, please feel free to share it on your social network using the buttons at the bottom of the page.

John Schuman Guide to the Basics of Ontario Family Law book cover

You can get a lot more information about Ontario Family Law issues, including a comprehensive explanation of parenting cases (parenting time and decision making), child support, spousal support, property division, and most other common family law issues by downloading this $9.99 Kindle eBook, Kobo eBook, or iBook for your iPad or iPhone or ordering it from Amazon as a paperback. But to understand how the law works precisely in your situation, it is always best to speak to a good Family Law Lawyer.

To comment on this article, or to contact John Schuman, please use the form below.

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