Separating or divorcing in British Columbia involves many complex issues, and dividing debt is often a significant concern. Just like assets, debts accumulated during the marriage are typically shared between the spouses. This blog post will explain how debt division works in BC, what types of debt are considered, and how to ensure a fair resolution.
For a general overview of property division in BC, see our Property Division page.
How Debt Division Works in BC
In BC, the Family Law Act governs how property and debt are divided in a divorce. The general principle is that both spouses are equally responsible for debts incurred during the marriage. This applies regardless of whose name is on the loan or credit card. It’s important to understand that “family debt” is treated similarly to “family property” in many respects.
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What Types of Debt are Included?
A wide range of debts can be included in the division, such as:
- Mortgages: Outstanding balances on the family home mortgage.
- Credit Card Debt: Balances on credit cards, even if only one spouse used the card.
- Loans: Personal loans, car loans, student loans (if incurred during the marriage), lines of credit.
- Business Debts: Debts incurred for a family business.
- Taxes: Unpaid taxes related to the marriage.
- Other Debts: Any other debt incurred during the marriage for family purposes.
Who is Responsible for the Debt?
Even if a debt is solely in one spouse’s name, if it was incurred during the marriage for family purposes, both spouses are generally responsible for it. The court aims for an equitable division of both assets and debts.
How is Debt Divided in BC?
Debts are typically divided equally between the spouses. This can be done in several ways:
- Offsetting Against Assets: The value of debts can be offset against the value of assets. For example, one spouse might take on more debt while the other receives a larger share of the assets.
- Direct Payment: Spouses can agree to each pay a certain portion of the outstanding debt.
- Transfer of Debt: In some cases, debt can be transferred from one spouse to the other.
What if a Debt Was Incurred After Separation?
Debts incurred after the date of separation are generally the sole responsibility of the spouse who incurred them. However, there can be exceptions, particularly if the debt was incurred for family-related purposes.
Protecting Yourself from Debt:
- Keep Records: Maintain detailed records of all debts incurred during the marriage.
- Credit Reports: Regularly check your credit reports to monitor joint debts.
- Legal Advice: Consult with a family lawyer to understand your rights and obligations regarding debt division.
Dividing debt is a crucial part of a BC divorce. Understanding your rights and obligations, and seeking professional advice, is essential for a fair and equitable outcome. Our experienced family lawyers can help. Contact us here or call 604-974-9529 for a consultation.
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