Your bankruptcy may have no effect on your spouse. But the answer to this question depends on whether your spouse co-signed debts with you, if you own assets jointly, or if your spouse contributes a large portion of the household income. Then there is the question of your bankruptcy affecting your spouse’s credit rating.
Let’s go over these issues one at a time;
Co-signed debts; bankruptcy protects the person who goes bankrupt, not others who co-signed the debt with you. So if your spouse co-signed the debt, the creditor can collect the debt from your spouse.
Assets owned jointly; if you own an asset jointly with your spouse and the trustee has to obtain your ownership value then the trustee may have to sell the asset to obtain your interest for your bankruptcy, but your spouse’s interest goes to your spouse. Keep in mind there are federal and provincial protected assets that limit what the trustee can deal with.
Spouse’s contribution to household income; there is a formula issued by the federal government that calculates the amount YOU have to pay to the trustee for your creditors as surplus income. This formula can be calculated including your spouse’s income and then adjusting out your spouse’s portion of surplus income, or the trustee can adjust the formula to ignore your spouse’s income completely. A Licensed Insolvency Trustee (LIT) can help explain these calculations based on your particular situation.
Spouse’s credit rating; your bankruptcy should not affect your spouse’s credit rating. Credit reporting agencies gather information on individuals for creditors to use. Your spouse can obtain their credit rating after you have gone bankrupt to make sure the information in their report is accurate and credit reporting agencies will correct errors when proof of error is provided to them.
To obtain more information about these concerns and how they affect you or your spouse based on your particular circumstances, contact a LIT in your area.