What does Canadian law say about spousal debt?
Canadian contract law treats debt as belonging to the person who signed for it. Marriage alone does not make you liable for your spouse’s debts. Neither does a common-law relationship.
If your spouse signed a credit card agreement, a line of credit, or a car loan in their name only, that debt is theirs. The creditor’s contract is with your spouse, not with you.
Contract law and family law operate on completely different tracks. Your bank doesn’t care what a family court judge says about who should pay what.
When are you liable for your spouse’s debt?
You’re liable for your spouse’s debt if you co-signed a loan, hold a joint credit account, or gave a personal guarantee. In each case, the creditor can pursue either person for the full balance.
For example, say you and your spouse co-signed a $30,000 line of credit. Your spouse stops paying. The lender doesn’t come after you for $15,000. They come after you for $30,000. That’s what you agreed to when you co-signed.
If you’re a joint cardholder, you share full liability with the other person. However, an authorized user, also called a supplementary cardholder, is not liable for the balance.
Supplementary cardholders
A supplementary cardholder is different from a joint cardholder. Being listed as a supplementary cardholder on your spouse’s credit card does not make you responsible for the debt. The primary cardholder is responsible for the full balance.
Source: Financial Consumer Agency of Canada – Joint Credit Cards
Some card agreements contain clauses that extend liability to the supplementary cardholder. Read the cardholder agreement before you assume you’re protected.
How is spousal debt divided during separation or divorce?
Spousal debt gets complicated during separation or divorce. Family law and contract law are separate legal systems, and they don’t talk to each other. A separation agreement can assign a debt to one spouse, but the original creditor isn’t bound by that agreement.
Say your separation agreement says your ex pays the joint line of credit. They stop paying. The bank can still come after you because you signed the original credit agreement. The bank wasn’t part of your separation, so it doesn’t have to follow it.
Does it matter which province you live in?
Yes. Provincial family law rules vary, and the differences are real.
Ontario
Ontario uses equalization of net family property under the Family Law Act. You take what you’re worth at separation, subtract what you were worth at marriage, and the difference gets divided. Debts count against your total.
The spouse with the higher amount pays half the difference to the other. This does not cover common-law spouses.
Source: Ontario Family Law Act, R.S.O. 1990, c. F.3, s. 4 and 5
British Columbia
British Columbia takes a different approach. Under section 81 of the Family Law Act, family property and family debt are split equally. Family debt includes all debts incurred during the relationship, regardless of whose name is on the account.
A court can order unequal division if equal division would be significantly unfair. Unlike Ontario, BC’s property division rules apply to common-law couples who have lived together for at least two years.
Source: BC Family Law Act, S.B.C. 2011, c. 25, Part 5
Quebec
Quebec uses a civil law system with a family patrimony regime for married couples.
The family patrimony covers certain shared assets like the family home, vehicles, and registered retirement savings, but it does not automatically divide all debts the way BC does.
If you’re separating in Quebec, get legal advice specific to that province. The rules are different enough from common-law provinces that general guidance isn’t enough.
| Province | System | Applies to common-law? | How debt is handled |
|---|---|---|---|
| Ontario | Equalization of net family property | No | Debts reduce each spouse’s net family property calculation |
| British Columbia | Equal division of family property and family debt | Yes (2+ years) | All debt incurred during the relationship is divided equally unless it is significantly unfair |
| Quebec | Family patrimony (married) / civil law | Limited | Separate property arrangement for married couples. Requires a legal filing |
Are you responsible for your spouse’s debt after death?
No. A deceased spouse’s debts are paid from their estate. If the estate doesn’t have enough to cover everything, the remaining debt dies with it. Creditors cannot come after you personally for debts that were only in your spouse’s name.
There are exceptions. Joint debts survive death because you’re already on the hook for the full balance. Co-signed loans work the same way.
Federal student loans are cancelled when the borrower dies. The estate doesn’t owe anything, and neither does the surviving spouse. This applies to both the older Canada Student Loans Act and the current Canada Student Financial Assistance Act.
Source: Canada Student Loans Act, R.S.C. 1985, c. S-23, s. 12(1) and Canada Student Financial Assistance Act, S.C. 1994, c. 28, s. 10 and 10.1
CRA is another matter. Under section 160 of the Income Tax Act, if your spouse transferred assets to you without adequate payment while they owed taxes, CRA can assess you for the tax debt up to the value of what you received.
This applies during life and after death. If you’re the named beneficiary of a registered account like an RRSP, CRA can look to you to recover the tax owing on the deceased’s final return related to that account.
Source: Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 160
How can you protect yourself from your spouse’s debt?
Don’t co-sign anything you can’t pay
Don’t co-sign unless you’re prepared to pay the full amount yourself. That’s the single most effective thing you can do. A co-signature is a legal promise to pay.
Keep a bank account in your own name
If your spouse owes money to the same bank where you hold a joint account, the bank can use its right of offset to withdraw funds from that joint account to cover your spouse’s debt.
The Financial Consumer Agency of Canada confirms that a right of offset can apply to joint accounts.
Source: Financial Consumer Agency of Canada – When a Financial Institution Can Take Money from Your Account
Check your credit report
Check your own credit report at least once a year through Equifax or TransUnion. Your credit report contains information about accounts in your name.
Your spouse’s debts and payment history don’t appear on your credit report unless you’re a co-borrower or joint account holder. But if you are on a joint account, their missed payments show up on your report too.
Source: Financial Consumer Agency of Canada – Credit Report and Score Basics
Close joint accounts during separation
If you’re separating, close or refinance joint accounts as soon as you can. A separation agreement won’t stop a creditor from coming after you. The only way out is to pay it off, close the account, or refinance into one name.
A marriage contract or cohabitation agreement can set out who handles which debts if the relationship ends. It won’t stop a creditor from coming after you, but it gives you legal recourse against your spouse if they don’t hold up their end.
Have questions about debt?
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Frequently asked questions
Does getting married make me responsible for my spouse’s existing debt?
No. Debts your spouse brought into the marriage remain their responsibility. Marriage does not make you liable for what they already owe. You become liable for a spouse’s debt only if you co-sign, co-borrow or guarantee it after the fact.
Can a creditor come after me for a debt that is only in my spouse’s name?
A creditor can only pursue the person who signed the credit agreement. If only your spouse’s name is on the account, the creditor has no claim against you. That debt can still come up during property division and affect your equalization payment, but the creditor itself can’t touch you.
Is my credit score affected by my spouse’s debt?
Your credit score is individual. Your spouse’s debts and payment history don’t appear on your credit report unless you’re a co-borrower or joint account holder. A spouse’s poor credit can affect joint applications for mortgages or other financing, but it won’t change your individual score.
What is the difference between a joint credit card and a supplementary credit card?
A joint credit card makes both cardholders equally responsible for the full balance. A supplementary card is linked to a primary account, and only the primary cardholder is liable. Some card agreements include clauses extending responsibility to the supplementary cardholder, so check your agreement.
Can CRA collect my spouse’s tax debt from me?
Not under normal circumstances. CRA can’t pursue you for your spouse’s tax debt just because you’re married. But if your spouse transferred assets to you to avoid paying taxes, CRA can use section 160 of the Income Tax Act to recover up to the value of what you received.
If a spouse dies, CRA can also come after a beneficiary who received registered assets, such as an RRSP.
Does a separation agreement protect me from joint creditors?
A separation agreement divides debt responsibility between you and your spouse, but it does not bind the original creditor. If your ex stops paying a joint debt assigned to them in the agreement, the creditor can still pursue you. Closing or refinancing joint accounts during separation provides stronger protection than a separation agreement alone.
What happens to joint debt if one spouse files a consumer proposal?
A consumer proposal releases only the person who filed it. If your spouse files a consumer proposal on a joint debt, the creditor can still pursue you for the full balance. You’d need to file your own consumer proposal, negotiate separately with the creditor, or keep making payments.
You can also file a consumer proposal on your own without your spouse. It covers your personal liability, including your share of joint debts, but the creditor can still go after your spouse for the outstanding balance.
In some cases, spouses file a joint consumer proposal to address shared and individual debts.
Talk to a Licensed Insolvency Trustee about spousal debt
If you’re worried about your liability for a spouse’s debt, or you’re dealing with joint debt during a separation, a Licensed Insolvency Trustee can review your situation and explain your debt relief options.
The initial consultation is free and confidential.