Family law: Divorce may lead to bankruptcy

On behalf of Gary Kirk of Kirk Montoute Dawson LLP posted in Family Law on Monday, October 22, 2018.

A marriage breakdown has the potential of causing financial havoc for both spouses. Family law rules in Canada spell out the processes by which issues relating to divorce are handled, but don’t talk about the financial pressures that divorce can create. Problems can be so severe, that a divorce can result in the bankruptcy of one or both partners.

Former spouses can no longer rely on each other for financial help — that team has been broken with the end of the marriage. There are many ramifications for those individuals who become insolvent. If the person was the payer of child support, the child can also suffer. Although bankruptcy doesn’t mean a parent is off the hook for support, his or her support payments might be modified by a judge taking into consideration the person’s financial situation.

A spouse who is the payee of spousal and/or child support on behalf of the children can also file a claim per that bankruptcy seeing that he or she is either not being paid or receiving less money from the payer. In terms of assets, the timing of the bankruptcy filing will come into play when figuring the division of assets. Debts would be handled in the same way.

There are so many things that can come to consider when it comes to divorce. Married couples in Canada who aren’t aware of how bankruptcy can affect the divorce process would benefit from the experience of a family law lawyer. A lawyer will be able to explain the laws as they relate to issues that can seem perplexing or complex. 

Related Posts: Understanding home ownership and property rights in a divorce, Travelling without children during a family law dispute, Set boundaries and rules to protect kids from child custody drama, Protecting credit amidst a family law dispute