Dealing With Debt After Divorce
Separating from your spouse is a painful experience. To add to this misfortune, if your spouse was in debt prior to the separation, then you are most often left to deal with a good part of this burden after the divorce. Resolving financial issues amidst emotional distress can be a harrowing task. Hence, it is recommended that you approach a good family law firm Edmonton to get you through the divorce proceedings smoothly. A divorce attorney will also help you in sorting out your finances and establish a fair division of assets without rancor and stress. This also includes helping you deal with debt post the divorce. Our main focus here is to define a plan of action to help you tackle debt after a divorce:
Understanding the Division Of Debt
Before you proceed with the actionables pre-requisite for dealing with debt, it is important to understand the way in which debt is divided between the spouses along with your divorce attorney.
The governing law in this matter is the Matrimonial Property Act (MPA). The law states ways to fairly divide matrimonial property among spouses during a divorce. This is inclusive of debts as well. Preferably, it is recommended to sit down with your spouse before separation and discuss the division of debt. Each spouse should pay off the debt they have incurred themselves. For example, if your spouse has a long-standing educational loan to pay off, then he must pay it off himself. On the other hand, if you are liable to Revenue Canada, then you should take responsibility for it.
In cases where spouses have joint debt, both partners are jointly responsible to pay off the loan. If the partners have many joint debts, then each of you can be assigned the payment of the debts systematically. However, it is important to keep in mind that while one person takes the responsibility of paying off the joint debt, the creditors will still hold both of you accountable for the loans. Seeking advice from a reputable family law firm in Edmonton can help partners resolve issues of debt amicably.
Drafting the Separation Agreement
While getting a divorce, it is prudent to make sure you get your separation agreement drafted by an experienced family law attorney. A separation agreement is a standard contract between the spouses which states their agreement regarding child custody, parenting, and property division. If you know that you could be held liable for your spouse’s debts, then it would be advisable to ask for more property in the settlement. Drafting a cohesive separation agreement with the aid of a divorce lawyer a will protect you from becoming financially dependent on your spouse.
Filing for A Consumer Proposal
Filing for a consumer proposal can be a viable solution when you are burdened with multiple debts. To get started, you need the help of a Licensed Insolvency Trustee. A consumer proposal is considered a good option if:
- Your debts are less than $250,000
- You cannot pay the full amount despite having a stable income
The trustee will give you financial guidance to reduce your overall debt. Filing for a consumer proposal also eliminates the chances of your ex-spouse defaulting on payment of installments.
To know more about dealing with debt, we recommend you consult an experienced divorce attorney from a family law firm in Edmonton. Get in touch with our legal experts at Prowse Chowne today.