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should both parties be responsible for debt incurred during marriage?

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  • should both parties be responsible for debt incurred during marriage?

    So if one party is a stay at home mom and the other worked and paid all(or almost all) the bills during the marriage, should the woman be responsible for the debt incurred and paid for by the husband? i.e. credit card, utilities, etc. She gets half the value of the home, but why isn't she responsible for half the debt incurred during the marriage (not counting mortgage)?

  • #2
    To the best of my knowledge both parties are entitled to the assets acquired during the marriage and are responsible for debts incurred during the marriage.

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    • #3
      Originally posted by dadonown View Post
      So if one party is a stay at home mom and the other worked and paid all(or almost all) the bills during the marriage, should the woman be responsible for the debt incurred and paid for by the husband? i.e. credit card, utilities, etc. She gets half the value of the home, but why isn't she responsible for half the debt incurred during the marriage (not counting mortgage)?
      I think that she is responsible for half the debt, it comes out of her equity for the house. People with more experience with this will respond to you and give you a more clear answer

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      • #4
        In Ontario the net family property cannot be less than $0. If you have $20,000 in assets, and $30,000 in debt, then you do not split the debt, you split the $0. In other words, the assets would go to debt, and then the remaining $10,000 would go to the party whose name it is in.

        If a family intends on carrying a large debt load, it would be wiser to have it held jointly, as long as it can be clearly known where the money is going, and if it is for family purposes. Both parties should know how much debt there is and how it is being paid.

        If one spouse is carrying huge personal debt, spending it on themselves, and hiding it from the other spouse, it's hardly ethical to split the debt, although it will count against the net assets. Again, if the debt exceeds the assets, it is not split.

        The section of the Family Law Act that deals with this specifies the equalization of assets. If there is no net asset, debt is not equalized.

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        • #5
          Interesting Mess. I wonder if this differs province to province?

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          • #6
            I'm not sure province to province. It is based on provincial legislation though, so there will be differences. I know that Alberta has some significant differences overall, especially around dower rights and v-date, and Quebec is almost completely different, being based on French Civil Code instead of English Common Law. B.C. and the Maritimes seem to be most like Ontario.

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            • #7
              Originally posted by Mess View Post
              If one spouse is carrying huge personal debt, spending it on themselves, and hiding it from the other spouse, it's hardly ethical to split the debt, although it will count against the net assets. Again, if the debt exceeds the assets, it is not split.
              Hello Mess - Can you explain this a bit more?? I tried to give a simplistic example which I hope is easy to follow - thanks for your efforts here.

              If a spouse does take on debt without the knowledge of the other - it is a debt that if I understand, "husband buys a tractor unknown to the wife, debt is $100,000, husband no longer has the tractor but still has the debt - this debt will then go against the value of the property that the husband would list on the valuation date? Asuming all else is equal between the spouses for debt and assets but they do own a home valued at $300,000 would the husband's debt bring his net family property down the full $100,000 and if this is the couple's only asset (for simplicity) is that house, the wife would have $150,000 net propety on the date of valuation but the husband would be listing his net family property as $50,000 because he gets to account for his bad debt?

              What this comes down to is the wife would then owe her husband an equalization of half the difference (wife listing $150,000 and the husband $50,000) so she would owe him $50,000 which would come out of her equity in the home because she has no other asset to make that $50,000 equalization payment? (she in effect would be responsable to cover half that debt her husband incurred, without her knowledge, because they own a home with equity, are in the end, in a marriage which the law states we are 50/50 when dividing our asset/debts so long as one spouse does not go below $NIL??

              I do understand that if the tractor debt was $200,000 the husband could only lower his net property to NIL if the only asset was that $300,000 house, but if the wife still has net property, she will owe her husband half the difference in equalization in this case $75,000? IS this right???

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              • #8
                You have it right, to my understanding, as explained to me by my lawyer, and confirmed with every Ontario law website I have researched, as well as my own reading of the Ontario Family Law Act.

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                • #9
                  Originally posted by dadonown View Post
                  So if one party is a stay at home mom and the other worked and paid all(or almost all) the bills during the marriage, should the woman be responsible for the debt incurred and paid for by the husband? i.e. credit card, utilities, etc. She gets half the value of the home, but why isn't she responsible for half the debt incurred during the marriage (not counting mortgage)?
                  to answer the OP's question re the day to day bills we incurr to live and keep a house operating - the answer is yes in the end all your bills will be split 50/50 subject to her having enough asset to cover the equalization. In my case, I am on disability now and my income is now only a very small portion of what I did bring in when I was supporting our family and much less than my ex is earning today. It doesn't matter what my income is. We will be doing our form 13.1 and my equity in the house will be used to pay her back any amounts she covered on my behalf.

                  We elected to stay in the same house, or at least tried to, and the months we both lived there with our three children - I am responsible to cover half of all the expenses incurred after the valuation date even but she must make that claim and I must cover it regardless of my income today.

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                  • #10
                    Ok, so to clarify with an example....
                    Let's say there is a mortgage on the MH remaining at $100k on the date of separation/valuation. Each party is responsible for $50K of that debt. That is a given.

                    Now, lets say I paid for all the utilities, credit cards, property taxes and mortgage during the marriage (she did not work, or at least only a couple of part time jobs for a very short time...other than being a stay at home mom)....say $50K in utilities, credit cards, property taxes and $100K in mortgage payments. Again all paid up before the date of separation. Does she now owe me $75K? Payable from her half of the value of the MH?

                    And how to prove I paid almost everything? Income tax returns showing income earned during the marriage?

                    An acquaintance tell me that is what happened to his sister. She went after the money, but ended up owing the husband $30K. He paid the bills and she stayed at home.

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                    • #11
                      Originally posted by dadonown View Post
                      Ok, so to clarify with an example....
                      Let's say there is a mortgage on the MH remaining at $100k on the date of separation/valuation. Each party is responsible for $50K of that debt. That is a given.

                      Now, lets say I paid for all the utilities, credit cards, property taxes and mortgage during the marriage (she did not work, or at least only a couple of part time jobs for a very short time...other than being a stay at home mom)....say $50K in utilities, credit cards, property taxes and $100K in mortgage payments. Again all paid up before the date of separation. Does she now owe me $75K? Payable from her half of the value of the MH?

                      And how to prove I paid almost everything? Income tax returns showing income earned during the marriage?

                      An acquaintance tell me that is what happened to his sister. She went after the money, but ended up owing the husband $30K. He paid the bills and she stayed at home.
                      You are incorrect. Past bills etc do not count, that is not a debt. Doesnt matter if you paid for almost everything, she stayed at home and someone had to do it (pay the bills i mean). By paying this stuff you showed your acceptance of her being a stay at home mom. It is current debt that counts.

                      Once you decide to sepatate but remain in the same house then you may have more of a case. Charging her for half the bills since the date you moved into the house will not fly and it seems that is what you are expecting. No judge is going to give you money for a hydro bill from 5 years ago.
                      Last edited by standing on the sidelines; 07-28-2012, 11:07 AM.

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                      • #12
                        Agree with Standing. If you try to discount stay-at-home spouse's "traditional role" you will have egg on your face big time.

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                        • #13
                          That's why I asked. It came as a surprise when my acquaintance related their sister's story.

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                          • #14
                            Originally posted by dadonown View Post
                            That's why I asked. It came as a surprise when my acquaintance related their sister's story.
                            I am thinking there is more to the sisters story.

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                            • #15
                              it may not be a stay at home mom but a spouse who like myself makes far less than the poster. so if the income spread is 80/20 or 90/10 you will be more likely to be living the higher spouse's standard of living. It is impossiple for the lower income spouse to keep up with half.

                              So as my lawyer put it - it comes out of my equity in the house. In the end I will pay for half thus paying her back. You will never get past bills included. You do have a chance at having your currrent credit card bill, cut off on the valuation date - if like us we funnelled a lot of monthly bills through the credit card, my credit card, and it was $4,000 and I could easily show that $3,700 was indeed monthly recurring household type expenses I would be allowed to make the claim for her to cover half. This only applies to the current outstanding credit/bills as it would be no different if we were holding onto the paper copy of each bill sitting on the coffe table ready for payment.

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