Does Bankruptcy Affect My Spouse in Canada? Credit, Debts & Assets

Your spouse is completely unaffected by your bankruptcy if all debts are in your name only—their credit score, assets, employment, and personal finances remain protected. Joint debts are different: when you file bankruptcy on co-signed loans or joint credit cards, your spouse becomes 100% responsible for the full balance of those debts.

This protection exists because bankruptcy is an individual legal proceeding under the Bankruptcy and Insolvency Act. Only the person who files bankruptcy is bound by the process and receives the discharge. Spouses remain separate legal entities with separate credit reports and separate liability for debts not co-signed.

Does bankruptcy appear on my spouse’s credit report?

Your bankruptcy appears only on your credit report as an R9 rating, the most severe credit rating. Your spouse’s credit report remains completely unaffected if all debts are in your name only. Their credit score, payment history, and account information continue unchanged.

Joint accounts are the exception. Co-signed loans, joint credit cards, and joint lines of credit appear on both spouses’ credit reports. When you file bankruptcy, these joint accounts show on your report as included in bankruptcy with an R9 rating. Your spouse’s report shows the same accounts, but their individual rating depends on whether they continue making payments.

If your spouse takes over payments on joint accounts after your bankruptcy discharge, their credit rating on those accounts may improve over time from R9 to R1 if payments remain current. If they cannot afford payments and accounts go into collections, both credit reports show negative information—yours from bankruptcy inclusion, theirs from non-payment.

Credit bureaus do not link spousal credit files. Your R9 bankruptcy notation does not transfer to your spouse’s report. Lenders reviewing your spouse’s credit application will not see your bankruptcy unless they specifically check household debt obligations or your spouse volunteers the information.

What happens to joint debts when one spouse files bankruptcy?

Joint debts transfer 100% liability to the non-bankrupt spouse immediately upon filing. If you have a $30,000 joint line of credit and file bankruptcy, your liability is discharged within 9 to 21 months. Your spouse becomes responsible for the full $30,000 from the moment you file. Creditors do not reduce the balance—joint debt remains joint regardless of bankruptcy.

Creditors can begin collection actions against your spouse immediately. Phone calls, letters, and legal proceedings shift entirely to the non-bankrupt spouse. If your spouse cannot afford the full payments, creditors may sue for judgment and garnish wages. Provincial wage garnishment limits apply—Ontario allows up to 20% of gross wages, British Columbia and Quebec allow up to 30%.

Consumer proposals offer an alternative when significant joint debts exist. Both spouses can file consumer proposals simultaneously, each negotiating to pay 20 to 40 cents per dollar owed. This approach protects both parties from full liability and costs less than one spouse filing bankruptcy while the other struggles with joint debts. Total household debt relief often exceeds $50,000 when both spouses file proposals on $100,000 combined debt.

If only small joint debts exist—under $5,000 total—one spouse filing bankruptcy may work if the other can afford monthly payments. For joint debts exceeding $10,000, both spouses should consult Licensed Insolvency Trustees to compare individual bankruptcy, joint proposals, or one proposal and one bankruptcy.

Does my spouse’s income affect surplus income calculations?

Your spouse’s income is counted when calculating surplus income thresholds even if your spouse is not filing bankruptcy. The Office of the Superintendent of Bankruptcy uses total household income and household size to determine your threshold. This means your spouse’s paycheck affects whether you pay surplus income and how much you pay.

The 2025 Superintendent’s Standards set thresholds by household size. A single person with no dependents has a threshold of $2,666 per month. A couple with no dependents has a threshold of $3,318 per month. The couple threshold is higher, which can reduce or eliminate surplus income payments.

For example, if you earn $4,000 per month net income as a single person, your surplus is ($4,000 minus $2,666) times 50%, which equals $667 per month. You pay $667 for 21 months if this is your first bankruptcy, totaling $14,007. If you are married and your spouse earns $2,000 per month, your combined household income is $6,000, but your threshold increases to $3,318 for a two-person household. Your surplus becomes ($6,000 minus $3,318) times 50%, which equals $1,341 per month—significantly higher due to combined income.

The trustee requires disclosure of your spouse’s income during the bankruptcy process. If your spouse refuses to provide income information, the trustee applies 50% of the threshold for your household size, which typically results in higher surplus income payments. Cooperation reduces costs.

Your spouse’s income fluctuations affect your surplus calculations throughout bankruptcy. If your spouse gets a raise, your surplus increases. If your spouse loses employment, your surplus decreases or may be eliminated. You must report household income changes to your trustee monthly.

The bankruptcy cost calculator shows how spouse’s income impacts total bankruptcy costs versus consumer proposal fixed payments that never change regardless of household income increases.

Can bankruptcy trustee seize my spouse’s assets?

Assets in your spouse’s name only are completely protected from seizure. Bank accounts, vehicles registered solely to your spouse, investments in your spouse’s name, and property titled only to your spouse cannot be touched by your bankruptcy trustee. The trustee has no legal claim to assets you do not own.

Jointly owned assets are different. If you jointly own a home with your spouse, your ownership percentage—typically 50%—is part of your bankruptcy estate. The trustee calculates equity on your share only. If your home has $100,000 total equity and you own 50%, your equity is $50,000. The trustee applies your provincial exemption to your $50,000 share, not the full $100,000.

Provincial exemptions protect specific amounts of equity. Ontario protects $10,783 in home equity per person. If your share of home equity is $50,000 in Ontario, you must pay $39,217 to the trustee to keep the home, or the trustee may force sale. Your spouse’s $50,000 share remains completely protected and goes to your spouse if the home sells.

Joint bank accounts require special attention. Money in joint accounts may be considered your asset if you deposited the funds. If your spouse deposited all funds, the trustee typically has no claim. Mixed deposits complicate matters—the trustee may claim a percentage. Opening a separate account in your spouse’s name only before filing protects household funds, though transferring large amounts immediately before bankruptcy may be challenged as preferential transfer.

Your spouse’s RRSP, TFSA, and investment accounts remain protected if held in your spouse’s name only. The trustee cannot seize these assets regardless of value. Your own RRSP is protected except for contributions made in the 12 months before filing bankruptcy.

Household goods and furniture in your spouse’s name are protected. If you cannot prove ownership of specific items, the trustee may claim them as jointly owned. Keep receipts and purchase records showing your spouse bought items to avoid disputes.

How does bankruptcy affect household finances?

Your bankruptcy does not require closing joint bank accounts or separating household finances, though many trustees recommend opening a separate account in the bankrupt person’s name only to simplify reporting. Joint accounts can continue for paying mortgage, rent, utilities, and household expenses as long as the bankrupt spouse reports all income and expenses accurately.

Mortgage payments continue unchanged if you keep your home. Your bankruptcy discharges unsecured debts like credit cards but does not eliminate secured debts. If the mortgage is in both names, both spouses remain liable for payments. Missing mortgage payments during bankruptcy may result in foreclosure—bankruptcy does not stop secured creditor rights.

Joint credit cards and lines of credit are closed when you file bankruptcy. Your spouse can no longer use these accounts. Your spouse should apply for new credit in their name only before you file if they need access to credit. Most major banks allow spousal account holders to apply for credit based on their individual income and credit history.

Utility accounts can remain in either spouse’s name. Some utility companies require deposits if accounts are in the bankrupt spouse’s name, but transferring utilities to the non-bankrupt spouse’s name avoids deposits. Property tax accounts, insurance policies, and cell phone contracts work the same way—transfer to the non-bankrupt spouse’s name if companies impose restrictions.

Your spouse can co-sign new credit for you after discharge, though most lenders require 2 to 3 years of credit rebuilding first. Your bankruptcy affects household borrowing capacity during the 6 to 7 years the R9 rating remains on your report. Mortgage renewals, car loans, and other joint credit applications face higher interest rates or denials until your credit rebuilds.

Should both spouses file bankruptcy together?

Both spouses filing bankruptcy makes sense when total joint debts exceed $15,000 and neither spouse can afford to take on the full balance alone. If you have $30,000 in joint credit cards and $20,000 in joint lines of credit, one spouse filing leaves the other liable for $50,000—often unaffordable on a single income.

Filing separately as individuals costs roughly the same as filing together. Each spouse pays minimum trustee fees of approximately $1,800 to $2,500 plus any surplus income for their individual case. Two bankruptcies total $3,600 to $5,000 in base costs before surplus income. However, discharging $50,000 in joint debt costs far less than one spouse attempting to repay the full amount.

Consumer proposals offer better protection for married couples with assets or income. Both spouses filing proposals simultaneously reduces total household debt by 60 to 80% while protecting all home equity, vehicle equity, and RRSPs. If you and your spouse owe $80,000 combined, joint proposals may cost $20,000 to $32,000 total over 5 years—approximately $333 to $533 per month for the household—compared to one spouse paying $50,000 plus interest on joint debts.

The consumer proposal calculator compares costs for joint proposals versus one spouse filing bankruptcy while the other remains liable for joint debts. Most Licensed Insolvency Trustees recommend proposals for couples with combined household income over $50,000 annually.

When one spouse has all debt in their name only and the other has no debt, filing individually works perfectly. The debt-free spouse’s credit and finances remain completely unaffected. When 80% or more of debt is individual and only small joint debts exist, one spouse filing bankruptcy while the other pays off small joint accounts may be the most affordable option.

Timing matters if both spouses need to file. Filing simultaneously allows one trustee to manage both cases with slight administrative cost savings. Filing months apart means dealing with two separate timelines, two sets of counselling sessions, and two discharge processes. Most couples prefer simultaneous filing for simplicity.

What if we divorce or separate during bankruptcy?

Bankruptcy continues independently if you divorce or separate during the process. Your filing, discharge timeline, and obligations remain unchanged. Separation does not stop your bankruptcy or accelerate discharge. You must complete all requirements—counselling sessions, monthly reporting, surplus income payments—regardless of marital status changes.

Joint debt liability survives separation and divorce. If you file bankruptcy on joint debts, your spouse remains 100% liable for those debts even if you later divorce. Family law property division and debt allocation in divorce agreements do not bind creditors. A divorce decree stating you are responsible for a joint debt means nothing to the creditor if you have discharged it in bankruptcy—your ex-spouse remains legally liable.

Surplus income calculations adjust when you separate. Your household size drops from two people to one person, lowering your threshold from $3,318 to $2,666 per month in 2025. This increases surplus income if you maintain the same income. Your trustee recalculates surplus based on your new single-person household status.

Child support and spousal support obligations continue during bankruptcy and survive discharge. Bankruptcy does not eliminate family support debts. If you owe child support arrears when you file, those arrears are not discharged. If a court orders spousal support during your bankruptcy, you must pay it. Support payments are deducted from income before calculating surplus income.

Dividing assets during separation complicates bankruptcy if you have non-exempt property. If you own a home jointly with $50,000 equity on your share and you separate, the family court may order the home sold and proceeds divided. The bankruptcy trustee has a claim to your share of proceeds above your provincial exemption. Coordinate with both your family lawyer and bankruptcy trustee to avoid losing exempt equity.

Filing bankruptcy before finalizing divorce may protect you from certain family law property claims, though this varies by province and specific circumstances. Some spouses file bankruptcy strategically to discharge unsecured debts before property division negotiations. Consult a Licensed Insolvency Trustee and family lawyer together when divorce and bankruptcy overlap.

Bottom Line

Your spouse’s credit, assets, and personal finances are completely protected when you file bankruptcy on individual debts—only co-signed or joint debts expose your spouse to 100% liability for the full balance after your discharge. Spouse’s income IS counted when calculating surplus income thresholds under the 2025 Superintendent’s Standards, potentially reducing payments by raising household exemption levels from $2,666 for singles to $3,318 for couples, but your R9 credit rating never appears on their credit report. Joint debts exceeding $10,000 often make both spouses filing consumer proposals more affordable than one spouse filing bankruptcy while the other struggles with full joint debt liability—proposals reduce household debt by 60 to 80% with fixed monthly payments, protect all assets including home and vehicle equity, and cost less overall than one bankruptcy plus ongoing joint debt payments. If you have significant joint debts, use the consumer proposal calculator to compare what each spouse would pay versus joint filing options.

Disclaimer: This article provides general information about spousal impact in Canadian bankruptcy and should not be considered legal or financial advice. Bankruptcy and joint debt rules vary by situation. Consult with a Licensed Insolvency Trustee for advice specific to your circumstances.

Last updated: February 2, 2026