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Calgary Family Law Office

BEST TIPS FROM CALGARY MATRIMONIAL DEBT DIVISION LAWYERS 403 444 5503

Let’s face it – since the beginning of 2016 (some say as early as the summer of 2014), Alberta families have had it tough financially. The demand for oil crashed, projects were canceled or put on hold, and tens of thousands of people lost their jobs. In order to survive financially, many Calgary family households had to:

● sell assets (cabins, RVs, etc.);

● cash out savings (RRSPs, TFSAs, etc.), and;

● maximize debt (mortgages, lines of credit, credit cards, etc.).

CALGARY MATRIMONIAL DEBT DIVISION LAWYERS – 403 444 5503

Peter Graburn, one of our Calgary senior family lawyers writes today’s blog to help you understand Calgary Matrimonial Debt Division.

But what happens when Alberta families decide (whether because of the economic tough times or for other reasons) not to stay together – what happens to that accumulated family debt? Matters can become even more difficult for Calgary Matrimonial Debt Division cases. In a previous post called  Calgary Alberta Matrimonial Property Division Lawyers, I indicated that under Alberta’s Matrimonial Property Act (MPA), matrimonial property (both assets and debts) for married couples is generally split equally (except for exemptions). As the MPA does not apply to unmarried couples, “common-law” partners (Adult Interdependent Partners, or AIPs) have to commence a Court action under the legal principles of constructive trust, unjust enrichment, and joint family venture to divide their family assets and debts if they cannot agree.

CALGARY MATRIMONIAL DEBT DIVISION – THE RULES

No matter whether the partners are married or not (the rest of this post will deal primarily with married couples under the MPA), there are certain issues that separating partners need to consider in the division of their family debt which is referred to as Calgary Matrimonial Debt Division:

  • Joint vs. Individual Debt – Debt can be owed in the names of both spouses together (joint debt) or in the name of only one spouse (individual debt).  Most divorcing couples understand they are both equally responsible for the repayment of debt run up in both names. But some may think that because debt is in the name of the other spouse that they are not responsible for the repayment of that debt – this is not always the case!  If the debt (either joint or individual) has been incurred during the marriage for the benefit the family (ie. for furniture, food, clothes, holidays, or even income tax debt owed to CRA), it will be considered matrimonial debt that both spouses have an equal obligation to repay;
  • Secured vs. Unsecured Debt – Debt can also be secured (ie. a home mortgage or car loan) or unsecured (credit cards, LOCs, loans from family, etc.). Most divorcing couples understand that they will likely take the outstanding debt associated with any asset(s) they are keeping (ie. the house or car). But some may have difficulty agreeing to be responsible for the repayment of unsecured debt incurred for a benefit enjoyed by others in the past (ie. restaurants, holidays, etc.);
  • Bankruptcy vs. Consumer Proposals – As a last resort, some spouses may feel the only way out of heavy matrimonial debt is to declare bankruptcy. But this can have a devastating effect on credit ratings and limit the ability to get credit in the future (ie. to purchase another home after separation).  Also, this may put the burden of paying the debt on the other spouse, which may simply drive the other spouse into considering bankruptcy as well.

CALGARY MATRIMONIAL DEBT DIVISION LAWYERS CAN HELP

For more general information click here. Every family case is different and it pays to meet promptly with one of our  Calgary family lawyers.

The time has come – at least currently in Alberta – when matrimonial property division is not just about focusing on dividing the assets.  These days, equal (sometimes more) consideration has to be given to how matrimonial debt will be paid, and who is going to do that. It is not an easy decision. Alberta Matrimonial Debt Division Lawyers assist their clients to understand the different laws that apply to the division of family debt upon the breakdown of marriage or AIP, and to make the often difficult decisions about how to deal with that debt.

Call Peter Graburn today at 403-444-4403.