Relationship Breakdown And Debt What To Do There Are Options
The process of ending a relationship or going through a divorce is, most times, never easy. It can be stressful and confusing to sort through all the different moving parts. And the decisions you make today can have long-term effects. Adding to that stress is sorting out how your finances are going to change.
Two household incomes are now cut back to one. Maybe you and your partner incurred some debt during the marriage that needs to be divided, or is no longer manageable. Consulting with an experienced advisor will help determine the different options available for you to deal with this debt. One of the more common points Licensed Insolvency Trustees (LIT) see in separation agreements is that one spouse will take on some of the debt, while the other spouse takes on the rest. The problem with this term in the agreement is the creditor who you owe the money to was not a party to it. So it’s not binding on them. What if your spouse doesn’t keep up their end of the agreement and doesn’t pay the debt they agreed to pay. Are you now liable to the creditor for it? An LIT can help you look at that term - they deal with spouses regularly, sometimes together and sometimes separately, in filing proposals to deal with this debt. It helps avoid problems later, and gives you a fresh financial start separate from each other.
Another common situation LITs see is where the parties can’t reach a resolution to divide their matrimonial property. For example, Husband and Wife #1 divorced 10 years ago. But due to the joint ownership of their residence and trying to sort out matrimonial debt, they could never reach a resolution that worked for both of them on how to divide everything. Husband, by this time, was even re-married. Unfortunately, he had also incurred significant debt that was no longer manageable. He decided a bankruptcy was going to be the best option for him to deal with the debt (for others, it may be one of the other options LITs deal with). What it did for him was deal with the debt he could no longer service. And, as Trustees, LITs were also able to work with Wife #1 to reach an agreement that saw her paying a fair price for ownership of the residence they owned together, deducting an amount for the joint debt she took over. The bankruptcy took some of the emotional elements out of the picture and finally brought the matter to a close for both parties.
The most important thing to know is there are options to deal with the debt when your relationship is ending, and that seeking advice early from a Licensed Insolvency Trustee such as MNP can mean more options are available to both of you. It might save you costs and stress in the long run and help you move on to a fresh financial start.
