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How does my partner's bankruptcy affect me?
Your spouse or partner’s bankruptcy affects you if you have joint debts. Joint debt is a debt that you and your partner owe together. For example, if you both signed a loan or a credit card agreement, you are both responsible for paying it back.
If you have a joint debt and your partner files for bankruptcy, you will have to pay off the whole amount yourself. This is true whether you are married, divorced, separated, or common-law. In short, you have provided a personal guarantee.
If you do not have any joint debts, you are not responsible for what your partner owes.
Your credit rating
Your partner’s bankruptcy will affect your credit rating if you have joint debts that you can’t pay. If you don’t have joint debt, your credit rating will not be affected.
After bankruptcy, your partner will have the lowest possible credit score (R9). This can make it hard to get a mortgage or any other loan together in the future.
If you own a home by yourself, your partner’s bankruptcy will not affect your house.
But if both of you own a home together, your partner's creditors are entitled to their share of the equity. You might have to sell your house to give the creditors the money that you owe.
You can also buy your partner’s share of the home’s equity. If you do this, you will not have to sell your house to pay the debts. Instead, the creditors will receive the money that you pay for your partner’s share.
The same rules apply to a matrimonial home.
Surplus income payments
You add both partners’ incomes together to decide if the bankrupt partner has to make surplus income payments. If you earn more money than the bankruptcy guidelines allow, you will have to make surplus income payments.