One spouse consolidating debt with a Consumer Proposal does not pass responsibility to the other spouse for debts that were separately held, nor will one spouse’s Consumer Proposal be reflected on the other’s credit history. It is quite possible, and common, for one spouse to restructure their debts using a Consumer Proposal while having zero impact on the other spouse. In fact, the other spouse may not even be aware of the Consumer Proposal filing, as only those to whom money is owed are typically notified of the proposal.
Spouses do not automatically become responsible for paying each other’s debts simply by getting/being married or being in a common-law relationship. If you owe debts separately from your spouse or common-law partner (i.e. they are not a co-signer, joint borrower or supplementary cardholder) they will not be impacted by your decision to file a Consumer Proposal.
Most Consumer Proposals will offer creditors repayment of a portion of the debts owing by way of monthly payments, but your spouse is not held responsible for making payments on either the original debts, or the proposal payments if they are not a co-signer, co-borrower, or co-cardholder.
In the event your spouse is a co-signer, co-borrower or co-cardholder and you make a Consumer Proposal, your spouse would be responsible for repaying the full balance of the joint debt, less whatever that creditor receives as part of your Consumer Proposal. One alternative option in these circumstances is to consider filing a joint Consumer Proposal.
A Licensed Insolvency Trustee can help you understand your options when it comes to managing debt and assess whether one or both spouses making a Consumer Proposal would be an appropriate solution to your specific situation.
Read more: Am I responsible for my spouse’s debts?