Vancouver Family & Divorce Lawyers | Henderson Heinrichs LLP

Should I pay or should he owe now?

Written by: Kevin Heinrichs (View All Posts • View Bio ) Published: December 16, 2011
Categorized: Property Division.

I was recently asked  if a person could be held liable for debts that were taken on by a spouse in his or her name only.

Generally speaking, if Bob and Alice are spouses, Bob incurs a debt in his name, and Alice has not co-signed or in some other way promised to the creditor that she will also be responsible for the debt, then the creditor can’t demand payment from Alice just because she is married to Bob.

What the creditor can do if the creditor isn’t getting paid, is get a judgment against Bob and, if Bob still refuses to pay, ultimately go after the assets in Bob’s name.

Creditors may try to intimidate Alice and tell her they have a claim to the assets in Alice’s name too (collection agents often tend to be quite aggressive) but as long as no “triggering event” has happened, they would be bluffing.

The triggering events in BC are when:

  1. both spouses sign a separation agreement;
  2. the Court makes a declaration that there is no prospect of reconciliation (a “section 57 declaration”);
  3. the Court orders a divorce; or
  4. the Court declares the marriage is null.

Once a triggering event happens in BC, then each spouse is presumed to have a ½ interest in all family assets, whether they are owned by one spouse, the other spouse, or jointly. (This ½ ownership may be adjusted later by agreement or by a Court.)

So, generally, a spouse isn’t liable for debts that she didn’t take on and never promised to pay—not even her spouse’s debts.

If, however, Bob owes a debt in his name and a triggering event has occurred, creditors can try to go after property that is in Alice’s name because Bob, by default presumption, will have a ½ interest in all family assets—even ones that are only in Alice’s name.

Keep in mind, too, that your situation may lie outside the norm and we strongly suggest that you seek legal device prior to making any decisions.  The details of your particular situation (the character of the assets in question,  the actual ownership of the assets  and the nature of the debts owed) will dictate whether it is wise to seek or delay the timing of a triggering event. We routinely advise clients on these issues and you should contact us to discuss your particular situation.

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