Debts and Separation: Who Is Responsible for Debts After a Breakup in Quebec?

A separation doesn’t make debts disappear, nor the contracts that were signed during the relationship. After a breakup, you need to look at which debts are personal, which are joint, and which obligations come from a loan that both ex-partners co-signed.

Who ends up responsible for a debt can depend on whose name appears on the contracts that were signed, but also on the family situation and the couple’s legal status.

A separation can also create serious financial pressure: there are now two homes to pay for, expenses that used to be shared, costs tied to the separation itself, and shared payments that still have to be made.

In some cases, speaking with a professional can help identify the options available when debt becomes difficult to manage.

Are you responsible for your ex-partner’s debts?

Generally speaking, you are not automatically responsible for your ex-partner’s personal debts if you didn’t sign the contract or co-sign the loan.

For example, if your ex-partner has a credit card, a line of credit or a car loan in their name only, that debt normally remains their responsibility after the separation.

On your side, you remain responsible for your own debts, even if you took them on while you were together.

That said, the documents need to be checked carefully. A debt that looks like “the other person’s” can sometimes turn out to be a joint debt, or one that was guaranteed through a co-signature.

The date the loan was taken out isn’t the only thing that matters: the contract itself and the people who signed it are important.

The rules can also vary depending on whether you were married, in a civil union, in a parental union, or common-law partners. If you’re unsure about your rights or obligations during a separation, a lawyer can advise you.

What is the difference between a personal debt and a joint debt?

A personal debt generally belongs to the person who took it on, while a joint debt binds the people who signed the contract.

Here are some examples:

• A credit card in one person’s name only is generally a personal debt.
• A line of credit signed by both partners is a joint debt.
• A co-signed personal loan can make the co-signer responsible for repayment.
• A shared credit card: the people named on the contract can be responsible for the account.
• Financing signed by both partners: the obligations depend on the terms of the contract.

It’s also important to distinguish between a “solidary” debt (joint and several liability) and a debt where each person is responsible only for their share.

With a solidary obligation, the creditor can (depending on the contract and the applicable rules) claim the full amount from a single debtor. A private agreement between ex-partners does not automatically change the creditor’s rights.

For example, you might agree with your ex that each of you will pay half of a debt. But if the contract makes you both responsible to the bank and your ex stops paying, your personal agreement won’t necessarily prevent the creditor from claiming the amounts owed from you.

What happens to a joint credit card after a separation?

If you are both responsible for the account, the separation does not automatically end your obligations toward that creditor. This is why it’s important to act quickly.

Start by checking whether you are both account holders, or whether there is only one authorized user. When possible, you can contact the financial institution to find out what options are available to:

• close the account;
• modify the account;
• remove a holder (if the creditor agrees);
• pay off the balance;
• transfer the debt through a solution the creditor accepts.

Avoid continuing to use a shared card simply because the separation isn’t officially settled yet. New charges can make the situation more complicated.

It’s also important to keep statements and proof of payment. If you pay a joint debt to avoid financial consequences, you may have recourse against your ex depending on the circumstances.

What happens if you co-signed a loan?

A co-signature can require you to repay the loan if your ex stops making payments.

This can apply to:

• a car loan;
• a personal loan;
• a line of credit;
• financing;
• certain other credit contracts.

A separation does not automatically release the co-signer from their obligations. And the creditor isn’t necessarily bound by the agreement you made with your ex.

For example, you might agree with your ex-partner that they will continue paying for their vehicle on their own. But if your name is still on the contract and they stop making the payments, the creditor could turn to you to make them (depending on the terms of the loan).

Even when one or the other files for bankruptcy, the Government of Canada indicates that the co-signer can still have their own payment obligations toward the creditor.

So if you co-signed a loan that is becoming a problem, it’s better to book a consultation with a trustee before the payments fall behind and your credit report is affected.

Can a separation lead to serious debt?

Yes. A separation can quickly change your budget and make debts much harder to pay than when you were a couple.

When two people live together, several expenses are shared. After a breakup, each person may have to cover on their own:

• housing;
• electricity and other utilities;
• groceries;
• transportation;
• insurance;
• credit card payments and other loans;
• certain expenses related to the children;
• professional or legal fees.

The situation can become even more difficult when one of the ex-partners stops paying their share of a joint debt.

Some people then use their credit card or line of credit to make up for the shortfall. That can bring temporary relief, but it can also gradually push the debt level higher.

If your monthly payments are becoming hard to make, or unpaid bills are piling up, it’s better to list your financial obligations right away and speak with a professional about the solutions available to you.

Can a consumer proposal help after a separation?

A consumer proposal can be an option worth considering when your personal debts become too difficult to repay, but it isn’t automatically the best solution for every situation.

A consumer proposal is a formal procedure administered by a Licensed Insolvency Trustee. It can allow you to offer your creditors repayment of only a portion of your debts, interest-free, with a reduced monthly payment over a period of 5 years or less (depending on the terms agreed to).

After a separation, this solution may be considered when your new budget no longer allows you to make the monthly payments on your personal debts.

The trustee will review:

• your income;
• your expenses;
• your assets;
• your debts;
• your actual ability to pay;
• your family situation.

A consumer proposal does not mean that all of the couple’s debts are automatically combined. A joint debt or a co-signed loan can continue to have consequences for the other person. Each debt therefore has to be examined separately.

You can learn more by reading our article on the consumer proposal and your spouse if your financial situation is tied to that of your spouse or ex-partner.

What happens if your ex-partner files a consumer proposal or bankruptcy?

If a debt belongs solely to your ex-partner, you generally don’t become responsible for it simply because you were a couple.

The situation is different if you co-signed a loan. For example, if your ex files a consumer proposal while you are a co-signer on a loan, their proposal doesn’t necessarily mean your own obligation toward the creditor disappears.

The Government of Canada indicates that a person who co-signs a debt can remain responsible when the other borrower files a proposal.

The same caution applies when an ex-partner files for bankruptcy. Shared debts and loans signed together have to be examined separately. Éducaloi points out that creditors can, in certain situations, claim repayment from the other spouse or ex-partner.

If your ex-partner is considering a consumer proposal or personal bankruptcy, don’t assume that their steps will automatically cancel your obligations.

When should you consult a Licensed Insolvency Trustee after a separation?

A consultation is recommended as soon as the separation makes your debts hard to manage, or when it’s no longer clear who has to pay what.

Get advice if:

• you can no longer keep up with your payments;
• your ex has stopped paying a joint debt;
• you co-signed a loan that has become a problem;
• creditors are contacting you;
• you’re using credit to cover your day-to-day expenses;
• your credit report is starting to be affected;
• your ex is considering a consumer proposal or bankruptcy;
• you’re wondering whether a consumer proposal might be appropriate.

A Licensed Insolvency Trustee can review your financial situation and explain the solutions available to you.

A consumer proposal and a bankruptcy are different procedures and must be assessed based on your personal situation.

If your situation is starting to feel overwhelming, you can also consult a lawyer when your questions concern spousal rights, the division of property, or obligations tied to family status.

After a separation, clarify your financial responsibilities quickly

A separation doesn’t automatically turn the couple’s debts into each person’s debts. The first step is to clearly identify personal debts, joint debts and co-signed loans.

Make a list of your credit cards, lines of credit, loans and other obligations. Then check the contracts to determine who is actually responsible toward each creditor.

If your financial situation has deteriorated following the breakup, don’t stay alone with unanswered questions. Several solutions can be considered depending on your debt level, your income and your ability to pay.

You can also read our article on the credit report to better understand the possible effects of a consumer proposal or a bankruptcy on it.

If you have too much debt following your separation, a free consultation with our trustee can help you determine which solutions might suit your situation.

FAQ – Debts and Separation in Quebec

Am I responsible for my ex-partner’s debts?

Not automatically. If a debt is in your ex-partner’s name only and you didn’t sign the contract or guarantee the debt, it generally remains their responsibility. Joint debts and co-signed debts are different, because each person’s role in the debt isn’t the same.

Who pays a joint credit card after a separation?

The people who are legally responsible for the account must continue to honour the contract with the creditor. A separation isn’t enough to remove that obligation. You need to contact your financial institution to find out about the options for closing or modifying the account.

What happens if I co-signed a loan with my ex?

You could remain responsible for the loan if your ex stops paying. A co-signature creates an obligation toward the creditor that doesn’t automatically disappear upon separation.

Can a consumer proposal include joint debts?

A proposal covers the debts of the person who files it, while a spouse or ex-partner can keep their own obligations toward the creditor. You therefore need to identify who is responsible for each debt before filing a proposal.

If my ex files for bankruptcy, do I have to pay their debts?

Not simply because you are their ex-partner. But if you signed the debt with them or co-signed it, you could remain responsible toward the creditor.

When should I consult a Licensed Insolvency Trustee after a separation?

As soon as your debts become difficult to pay, or when you’re no longer clear on which financial obligations are yours. A consultation lets you take stock of your situation and look at the possible solutions, without assuming that a consumer proposal or a bankruptcy is necessary.

Need to take stock of your debts after a separation?

If a separation is complicating your finances, or if you’re worried about joint debts, our Licensed Insolvency Trustee can help you clarify your financial responsibilities and learn about the solutions that could apply to your situation.

Gobeil Syndic offers a free phone consultation so you can take stock of your financial situation and determine the next steps for managing your debt.

We serve every city in Quebec, since everything can be done remotely.