Family law process: Bankruptcy and divorce in Canada

On behalf of Gary Kirk of Kirk Montoute LLP posted in Family Law on Tuesday, January 15, 2019.

Even those people who are ordered to pay child and/or spousal support aren’t off the hook for those payments if they declare bankruptcy. In Canada, the family law process is closing aligned to the laws that govern bankruptcy. One can’t hide behind bankruptcy laws to avoid financial obligations, especially where children are concerned. If back support payments are owed to a former spouse or children, a claim can be launched with the court.

In Canada, a person’s net income can be lowered by deducting support payments, which would lower any income payments in the event of a bankruptcy. When bankruptcy is declared makes a big difference. If a divorce is finalized before bankruptcy is declared, assets can go to a former spouse as dictated by a family court order or legal separation prior to the filing. As such, these assets are not part of the bankruptcy filing and safe from creditors.

As for joint debts, creditors are free to go after the former spouse who did not declare bankruptcy since he or she is still partly responsible for that debt. That includes any credit cards that were held jointly. A separated or divorced couple can, however, still file for joint bankruptcy.

There are many issues that figure into the family law process, bankruptcy issues being only one. A family law lawyer in Canada would be able to help his or her clients in any areas that potentially could be affected by a divorce. A lawyer may be able to help a client to come up with solutions to problems that may go hand in hand with divorce such as those associated with finances.

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