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Lorne MacLean, QC, MacLean Law, Vancouver

Vancouver BC Family Debt Lawyers explain: What is Vancouver BC family debt?

In today’s family law blog, Rana Yavari, articled student, at our team of top rated* Vancouver BC Family Debt Lawyers explains What is Vancouver BC family debt? Family debts include debts or financial obligations incurred by either spouse during the course of their relationship (namely the earlier of the start of cohabitation or marriage through to separation). In contrast, all debts or financial obligations incurred before the relationship starts or after separation are not BC family debts, unless the debt has been incurred for the purpose of maintaining family property.

Section 86 of the Family Law Act defines “family debt” as follows:

Family debt includes all financial obligations incurred by a spouse

(a) during the period beginning when the relationship between the spouses begins and ending when the spouses separate, and

(b) after the date of separation, if incurred for the purpose of maintaining family property.

Are All Debts Family Debts?

Our top rated* team of  family property and debt division lawyers As per section 81 of the Family Law Act, both spouses are responsible for family debt, regardless of use or contribution, and each is equally responsible for family debt on separation.  On its face, section 81 appears to have a real prospect of operational unfairness.  Examples of the types of debt for which a spouse might be equally responsible include:

(a) debt incurred by the other spouse in connection with a substance addiction or gambling problem;

(b) debt incurred by the other spouse in connection with the other spouse’s excluded property;

(c) debt incurred by other spouse on improvident terms that have been specifically objected to by the spouse. 

Significant Unfairness Test

If the equal division of family debt is significantly unfair, section 95 of the Family Law Act does provide the Court with a limited jurisdiction to vary the division. The British Columbia Court of Appeal in Parton v. Parton 2018 BCCA 273 explained what is required to meet the significant unfairness test under section 95 of the Family Law Act, “something objectively unjust, unreasonable or unfair in some important or substantial sense” is required. The new test is designed to reduce litigation by creating more certainty.

How Can I avoid Paying My Spouse’s Personal Or Improvident Debts?

The following factors set out in section 95(2) guide the court in determining whether an equal division is significantly unfair and the bolded portions can be directly related to family or other debts:

(a) the duration of the relationship between the spouses;

(b) the terms of any agreement between the spouses, other than an agreement described in section 93 (1) [setting aside agreements respecting property division];

(c) a spouse’s contribution to the career or career potential of the other spouse;

(d) whether family debt was incurred in the normal course of the relationship between the spouses;

(e) if the amount of family debt exceeds the value of family property, the ability of each spouse to pay a share of the family debt;

(f) whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends;

(g) the fact that a spouse, other than a spouse acting in good faith,

(i)substantially reduced the value of family property, or

(ii)disposed of, transferred or converted property that is or would have been family property, or exchanged property that is or would have been family property into another form, causing the other spouse’s interest in the property or family property to be defeated or adversely affected;

(h) a tax liability that may be incurred by a spouse as a result of a transfer or sale of property or as a result of an order;

(i) any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness.

Vancouver BC Family Debt Lawyers are ready to help you move forward to resolve matters. Call us toll free at 1-877-602-9900. 

*Top Choice Award (2014, 2016, 2017 2018, 2019), Top rated reviews on Google, Yelp, threebestrated, lawerratingz.com. Read more about our awards.