What are your plans for going into the future? Are you thinking about focusing on your career, expanding your skills, reaching the highest possible salary you can achieve and looking to settle down, get married, and have some kids?
Whichever choice is yours, there are going to be some financial decisions at various points along the way. All choices come with their own sets of obligations. Marriage, even common-law marriage, comes with its own set of legal issues. Be sure to consult a lawyer regarding questions concerning legal issues to ensure your finances are not adversely affected in the unfortunate circumstance of divorce or separation. Financial issues regarding marriage or a common-law (adult interdependent relationship), co-habitation or prenuptial agreements are all matters requiring expert advice.
Before you enter into a formal adult relationship, you will require an understanding of each other’s financial circumstances. Indebtedness, like owning a property with a mortgage may or may not be an issue for both partners to be concerned about. But, specifically, outstanding loans and credit card debt are issues to be addressed. In fact, sometimes these are matters which can often lead to partner breakups later.
What Does Debt Look Like For Couples?
Any debt you bring into the relationship, whether it’s marriage or common-law, is your sole responsibility unless otherwise stated in a prenuptial or cohabitation agreement. However, there are many different ways a couple can accumulate debt together. Some of these situations could look like:
- Supplementary credit cards, where one person is the primary cardholder and the other has a “supplementary” card connected to the account, but both parties may be held equally responsible for paying it off.
- Joint applicants, where both parties are held equally responsible for paying off the debt.
- Co-signors, where one party is the primary applicant, and the co-signor pays for the debt if the primary applicant defaults.
If you, or your partner, file a consumer proposal or a bankruptcy claim, it will generally only affect the credit of the person who is responsible for the debt. However, if you have joint debt or one person is a co-signor, then both parties will have their credit negatively impacted.
Finances After Divorce
Divorce can be a long, arduous process and can take many months before everything is finalized, especially if there are disagreements about property ownership and shared debt. According to the Financial Consumer Agency of Canada, some of the first things you should collect when you’re about to have a divorce are:
- Current loan statements
- Recent pay stubs
- Tax returns of the past 3 years
- Paperwork on family expenses
- Investment statements
- A list of your assets
If you have joint accounts, it is up to you and the other party to determine if it makes sense to keep these joint accounts open. An example of a case like this is if you’re both paying off joint debt that is taking money from this account, like a mortgage.
Certain income tax related benefits and credits are also affected by separation or divorce, so it’s important to report this information to the Canada Revenue Agency.
Need Help With Debt?
Our team specializes in helping people find meaningful answers for their debt problems, whether it’s their own or joint debt with a partner. Please, contact us today if you need help with your financial situation. Separating your financial woes from your other marital issues can be a helpful relief especially if you are either both parting ways or planning on staying together with the debt load off your backs.