When one spouse declares bankruptcy either before, during or after a relationship it can affect the other spouse’s rights to property and spousal maintenance.
Spousal maintenance claims do survive a declaration of bankruptcy if there are periodic or monthly payments and a spouse cannot get rid of their obligation to pay spousal maintenance by declaring bankruptcy. Lump sum spousal maintenance payments, however, may not survive.
Property claims can be affected by bankruptcy. When a person declares bankruptcy there is a stay of proceedings which prevents one spouse claiming an interest in the assets which are owned by the bankrupt. A spouse’s claim to property may be shared with the other unsecured creditors if they are able to prove their claim before the bankruptcy is concluded.
Some assets like RRSPs and pensions are “exempt” from the bankruptcy however and spouses may be able to pursue a claim against these assets.
FAQ
1) What is bankruptcy?
Bankruptcy is a legal process that occurs when someone is unable to repay their outstanding debts. It helps debtors eliminate or repay some or all of their debts under the protection of the bankruptcy court.
2) What is spousal maintenance?
Spousal maintenance, or spousal support, is a legal obligation for one spouse to provide financial support to the other after a separation or divorce. It’s intended to help the lower-earning spouse maintain a reasonable standard of living, especially if they were financially dependent during the relationship.
3) What is a property claim?
A property claim is a legal process of dividing assets and debts between spouses when they separate or divorce. This could include assets such as the family home, secondary properties, vehicles, bank accounts, investments, and pensions, and debts such as mortgages, loans, or credit card debt.
Deborah A. Todd
For more information, please contact Deborah Todd Law at 250-590-6226 to book a consultation, or use our submission form on the contact page.
