Upon the end of a marriage or common-law relationship, each couple will have various issues to address. While the division of assets is often the focus, there is a related component that also needs to be considered–the division of debts. Under the Family Law Act, the approach for this will be the same regardless of whether a couple was formally married or living in a common-law relationship for a minimum of two years.
When a couple plans ahead and creates an agreement regarding such matters, in most cases that will be followed. Other times, a couple may be able to reach an agreement on their own. When there is no such agreement in place and the couple cannot divide the debts themselves, a judge will do it for them.
Generally, when a judge is asked to make this determination, he or she will divide the debt equally. A different approach could be taken if doing so would be “significantly unfair.” In determining whether this is the case, multiple factors could play a role. For example, in some situations the ability of each party to the relationship to pay the debt owed will be considered. Other times, the way in which the family debt was incurred is relevant. Additionally, the court may look to whether following the separation, either one of the individuals caused the debt to increase or decrease.
Just what constitutes family debt will vary depending on the specifics of each couple. In addition to any mortgages the couple may have, income tax, credit cards, bank lines of credit, loans made by family members and repair costs could be included.
The divisions of debt can be complicated. Accordingly, it is advisable that parties have a knowledgeable lawyer assisting in the matter.