Money can be a tricky topic in any marriage, and one of the biggest concerns couples have is whether they’re responsible for each other’s debt. The good news? In Alberta, you’re not automatically responsible for your spouse’s debt—unless you’ve co-signed a loan or credit agreement. If your partner has debt in their name alone, it stays their responsibility.
Understanding how debt works in a marriage can bring peace of mind and help you make better financial decisions as a couple. The key is being informed and prepared so you can avoid surprises down the road.
We know how stressful financial worries can be. But you don’t have to face this alone, if you’re feeling uncertain about your next steps, BNA Debt Solutions is here to help. Let’s find the best path forward together.
Your Spouse’s Debt Isn’t Automatically Your Responsibility
In Alberta, Canada, just because you’re married or living together doesn’t mean you’re automatically responsible for each other’s debts. However, your partner’s financial situation can still have a big impact on your shared financial goals and decisions.
Financial Impact on Shared Goals
Your spouse’s debt may not be legally yours, but it can still impact the financial future you’re building together. If they have a lot of unsecured debts or a low credit score, it can make things like buying a home, getting a car loan, or even securing a good credit card more challenging.
Lenders look at both credit scores and household income when you apply for loans together. If your spouse has high debt, credit card debt or poor credit, lenders may deny mortgage or loan approvals or increase interest rates for joint applications.
Home & Car Purchases
Buying a home or a car is a big milestone for any couple. But if one spouse has personal debt, it can impact both of you when applying for loans. A lower credit score can make it harder to get approved or might lead to higher interest rates.
Interest Rates
When applying for joint credit, it’s important to know that your spouse’s debt can impact the interest rates you receive. Lenders look at both of your credit histories, so if your partner has a lot of debt or a low credit score, it could lead to higher interest rates and less favourable loan terms.
For instance, a lender may approve a $500,000 mortgage at 5% interest for an individual with good credit. However, if applying jointly with a spouse who has a low credit score, the rate may rise to 6.5%, significantly increasing monthly payments.
Must-Knows Before Co-Signing or Guaranteeing Debt
Before co-signing or guaranteeing a debt with your spouse, take a moment to understand how it could affect your financial future. It’s not about doubting your partner—it’s about making informed choices that protect both of you in the long run.
What Does Co-Signing Mean?
A co-signed loan is a legal agreement that holds both parties accountable for repayment. It means you’re agreeing to share the financial responsibility. If the primary borrower—like your spouse—misses a payment, the lender expects you to cover it. In the eyes of the lender, you’re just as responsible for the debt.
Guarantor vs Co-signer
Being a guarantor or a co-signer might seem similar, but they come with different responsibilities. A co-signer is equally responsible for the loan from day one, while a guarantor only steps in if the borrower fails to make payments.
If you’re thinking about taking on either role, it’s important to understand what you’re signing up for. As a guarantor, you might not have to make payments right away, but if the borrower struggles, the responsibility falls on you. That’s why it’s crucial to consider the borrower’s financial stability before making a decision.
Legal Consequences
If you’ve co-signed or guaranteed a loan and the borrower stops making payments, it can put you in a tough spot. The lender will come after you for the money, which could lead to financial trouble if you were not expecting to be strapped with the payment. On top of that, your credit score could take a hit, making it harder to get approved for loans in the future.
Always keep in mind that you may be held liable to cover the payments, so it’s crucial to consider your own financial well-being and whether you can afford to take over the payments if something goes wrong.
Before agreeing to co-sign, make sure you fully understand what you’re getting into. Read the loan terms carefully and have an open and honest conversation with the borrower about how they plan to keep up with payments. It’s essential for all parties to be clear on their responsibilities—even if the conversations are difficult, they’re worth it to ensure everyone understands their role and to help avoid misunderstandings later.
Dealing with Debt After a Bankruptcy Filing
Filing for bankruptcy can be a fresh start, but it’s important to understand how it affects shared debts, and whether it truly resolves underlying debt problems. If you have a co-signer or a spouse linked to your debts, they will still be responsible even after you file. This can create unexpected stress for them, which is why it’s worth considering other options.
- Bankruptcy: If your spouse declares bankruptcy, their debts and assets are handled separately. However, if you’ve co-signed any loans or credit accounts, you are still responsible for paying them. Creditors don’t just go away—they’ll look to you for repayment since you’re legally tied to those debts.
- Consumer Proposal: If your spouse opts for a consumer proposal, it can be a more flexible alternative to bankruptcy. They can negotiate reduced payments and often protect joint assets, like your home or car. A consumer proposal also stays on a credit report for less time, making it easier to rebuild financially. Still, if the proposal doesn’t explicitly forgive the remaining debt, you could remain liable for it in full.
To protect yourself from potential issues, you might choose to continue making payments on any shared debts. Keeping your Licensed Insolvency Trustee informed allows them to adjust debt claims properly, giving you peace of mind. It’s a proactive step that helps safeguard your financial future.
Managing Joint Assets When Debt is Involved
What Are Joint Assets?
When a couple owns something together—whether it’s a house, a bank account, or an investment—they share both the benefits and the responsibilities. These joint assets are an important part of a relationship and managing them well requires teamwork.
Take a home, for example. If both partners are listed as owners, they’re equally responsible for the mortgage and any other financial commitments tied to it, which can become a significant part of family debt.
Debt’s Impact on Joint Property
- Writ of Enforcement: If a creditor wins a judgment against your spouse, they can file a Writ of Enforcement against shared property, such as your home. While this doesn’t always mean immediate forced sale, it does create a legal claim that must be cleared before selling or refinancing the property. This could reduce your shared proceeds if the home is sold.
- Sale of Property: If things get serious, creditors might push for the property to be sold to cover the debt. In some cases, they may wait until the property is sold and then claim their share from the proceeds.
- Impact on Sale Proceeds: If your spouse has a significant amount of debt, it could impact the money you receive from selling your property. This might put extra strain on your financial situation.
What Happens to Debt When You Divorce?
Dividing debt during a divorce in Alberta isn’t always straightforward. Even after separation, joint debts remain unless they are refinanced or legally removed from one partner’s name. This means creditors can still pursue both spouses for repayment until the debt is settled.
How Courts Handle Debt & Assets
In Alberta, the courts focus on fairly dividing property and debt—but fair doesn’t always mean a perfect 50/50 split. When it comes to debt, anything taken on during the marriage, like credit card balances used for family expenses, is usually considered a shared responsibility.
Debt’s Impact on Divorce Settlements
If your name is still attached to a joint debt—like a mortgage, jointly held credit card debts, or a loan—creditors can still come after you for payments. This can get tricky because, in some cases, the court may decide to settle these debts using shared assets before dividing up what’s left.
Post-Divorce Debt Management
Having court settlements outlining who is responsible for which debts, does not change responsibility in the eyes of a bank—they will still come after whoever’s name is on the account. To avoid future complications, it’s a good idea to refinance shared debts into individual accounts whenever possible. Closing joint accounts and working with creditors to settle remaining balances can help prevent unexpected financial stress down the road.
Open Communication About Debt and Finances
When it comes to finances, it’s important to have a clear understanding of where you and your partner stand, both before and during marriage, to avoid any surprises down the road. People often have different beliefs about money based on how they were raised.
For example, some might believe that using credit is perfectly fine when they don’t have the cash available, while others might have been taught to avoid debt at all costs. These beliefs can be deeply ingrained and may shape how each person approaches money. However, it’s important to remember that while these views can be hard to change, it’s never too late to have an open conversation and find a middle ground that works for both of you.
Take Lori P, a BNA client for example. She and her partner faced their debt head-on, and instead of driving them apart, it brought them closer. She shared:
“Now, this wasn’t easy by any means… but we made it through!! Not only did we learn about why we got into this situation and how to move forward and make better choices, but we were given strategies to do it together. We didn’t expect this process to IMPROVE our relationship”
Her story is a powerful reminder that when we face financial challenges as a team, we don’t just fix our finances—we strengthen our relationships too.
Moving Forward Together With BNA Debt Solutions
At BNA Debt Solutions, we know how stressful debt can be, and we’re here to help with patience, understanding, and real solutions. With over 27 years of experience in Calgary, we’ve been guiding Albertans toward financial relief in a way that’s supportive, respectful, and free of judgment.
Personal Solutions for You and Your Relationship
Debt can put a strain on both individuals and relationships, but there’s always a way forward. If you or your spouse are struggling with overwhelming debt, BNA Debt Solutions can help you regain financial stability. With a deep understanding of how debt affects couples—from shared financial goals to legal obligations—we offer tailored strategies for both partners, ensuring you find the best fit to move forward with confidence.
How BNA Supports You With Spousal Debt
We understand that debt can put a strain on both your finances and your peace of mind—especially when it involves your spouse. Whether you’re worried about shared financial goals, co-signed loans, or the impact of a divorce, we’re here to help. From practical debt relief strategies to consumer proposals, we help you take control of your finances without the stress of bankruptcy. No pressure, no judgment—just real support to help you move forward with confidence.
Frequently Asked Questions (FAQs)
What Happens To Debt If My Spouse And I Separate But Aren’t Legally Divorced?
Even if you separate, joint debts remain a shared responsibility until legally removed or refinanced. Creditors can still pursue both parties for unpaid balances and missed payments may impact both spouses’ credit scores.
What Happens To Joint Debts If One Spouse Passes Away In Alberta?
Joint debts remain the responsibility of the surviving borrower. If a co-signed loan or joint credit card exists, the surviving spouse must continue payments. Sole debts belonging to the deceased’s estate and are settled before inheritance distribution.
How Does A Consumer Proposal Affect My Spouse’s Credit Or Finances?
A consumer proposal only affects the person filing. However, if you have joint debts, creditors may still seek full repayment from the other spouse. If you co-signed a loan, you remain liable for the outstanding balance. In cases where both spouses are struggling with debt, a joint consumer proposal may be an option to consolidate and manage shared financial obligations together under a single agreement.
Are There Any Government Programs In Alberta To Help With Spousal Debt?
Alberta offers debt relief options, but no specific government program eliminates spousal debt. A consumer proposal, managed by a Licensed Insolvency Trustee, can help reduce and restructure debt into manageable payments.
Should we seek debt advice before making major financial decisions?
Yes, seeking debt advice before making major financial decisions—like buying a home or co-signing a loan—can help you understand the risks and responsibilities involved. It ensures you’re making informed choices that align with your long-term financial health.
