partager-dette-ruptureApril 17, 2017

How to share joint debts in a break-up

When you decide to divorce or separate, you must give some thought to the division of your assets from those of your former partner. This division will depend on several factors that include the type of relationship you had. Each partner certainly must take care of their own debts. However, some debts will remain to be shared. Here is what you need to know to properly deal with debts and assets.

Were you married or in a common-law relationship?

In the case of divorce, usually, the value of property acquired during the marriage is divided equally between the two parties. This may not be so if you agree on a different sharing arrangement or if the courts decide otherwise. However, the partner getting a larger share of the joint property normally must compensate the other.

In the case of a common-law relationship, your rights are different. Usually, the division would mean that each person gets what they had bought. If no cohabitation agreement was signed, but you had contributed to the purchase, maintenance and upkeep of a property, some of these expenses may be repaid to you through an agreement with the former partner.

What is and what is not property?

The following are generally recognized as belonging to property (among other things):

  • Investments (RRSPs, TFSAs, RRIFs)
  • Insurance policies
  • Pensions
  • The house that you shared with your partner
  • Other real estate (cottage, property for rent, etc.)
  • Furniture, electronics or appliances
  • Books, records or pictures
  • Vehicles
  • Bank accounts and cash.

In addition, if you own an asset (a washing machine, for example) that is the subject of a contract with a company, it is possible for one of the partners to assume all the payments after the break-up.

It is important that they make the payments: otherwise, the company will have the right to sue both partners to get the money. This is why it is preferable to negotiate an agreement with the company so that it can contact the right person (now responsible for the payment).

Bank accounts and credit cards: how is that shared?

As its very name indicates, a joint account is shared by the two partners half and half. However, if one partner were to spend the other’s share, it is possible to get a court order for a refund of the missing part.

If an account is not a joint one, it belongs to the account holder only. For example, if your ex were to get a credit card and use it to make purchases, if the card is in their name, you would not be required to repay their debts on that card.

Finally, following a break-up, the partners are responsible for contributing to meeting the needs of their children, to a level dependent on their income and financial resources. Depending on the financial situation of each partner, one may need to pay child support to the other in order to cover their share.

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