Beware of your spouse’s debts
At a recent CDFA™ conference, I learned that until a legal separation agreement is actually signed, the debts and/or decisions of your spouse post-separation may significantly and adversely affect you financially and there may actually be nothing you can do, especially in a high conflict separation. If your spouse decides to file for bankruptcy (a process to be considered thoroughly with a qualified professional) and you do not have a legal agreement, your joint assets may be accessible by the bankruptcy trustee, on behalf of the unsecured creditors.
The speaker at the conference, a well-known Canadian C.A. and Trustee, explained that “one out of every eight persons who experience a relationship breakdown will end up filing some sort of insolvency protection.” The emotional toll of a marital breakdown is difficult enough without having to consider the options to relieve financial distress. I want to stress though that if you and your spouse can co-operate, there are options to restructure your finances that when manageable are much better choices than filing for bankruptcy. In separation when some debts have become unmanageable, and at least one of you feels there is no other choice, education, more than ever is KEY!