My husband and I have been separated for close to a year and a half. We will officially be divorced in 6 months if all goes as planned. We had our lawyers file a separation agreement and we have divided all of our assets. The house is now officially in my name but my soon to be ex-husband recently told my lawyer that he has decided to file for bankruptcy. This process confuses me and I am worried this may affect my assets in some way because we are not yet officially divorced. Because the house was put into my name only in the past year, does this mean that half the house could be an asset of his he is required to turn over to a trustee? I fear I will lose my home and I need your advice. LM
Separation and divorce questions regarding bankruptcy are always case-by-case and it is advised to discuss these questions with a trustee in bankruptcy. It may be important to make sure you are the sole person on the title of the house. You should have your lawyer do a title search to make sure all documents are properly signed and registered. Set up an appointment with your bank to find out what joint accounts you have with your soon to be ex-husband. It is important to have this information for your safety because if your ex does file for bankruptcy and then gets discharged after a period of time, you do not want to end up responsible for any outstanding joint debts. Make a list of all questions that you have and set up an appointment with a trustee in bankruptcy in order to ensure you know and understand your rights. With respect to the house, the trustee will need to know its value on the date of the transfer as well as the amount of the mortgage debt that you assumed. You should also determine if your ex-spouse is still liable on the mortgage.
In years gone by, a person would graduate from high school, trade school, university or a college and have a well paying job in a relatively short period of time. He or she would move out of the family house, buy a car, get married, etc. Credit was available, but it was relatively difficult to obtain. Financial difficulties would sometimes occur, but it was usually the result of a specific catastrophe such as divorce, medical issues, or some similar event.
Fast forward to 2015, students are staying in school much longer than before, graduating with a high student debt and are taking a longer period of time to find the perfect job. Many people have theorized that the lack of an available job is one of the reasons why students elect to stay in school as long as they do. Banks and other credit grantors have responded by being lenient in their collection procedures on debts owed by recent graduates. The government has even changed the Bankruptcy and Insolvency Act to increase the waiting time after you ceased to be a full or part time student from two years to seven years before you can claim student loans in a bankruptcy or a (debt consolidation) consumer proposal. So, what is the issue!
Students are staying at home longer, and by the time they move out, have less time to save for their own apartment, marriage, children or even their own retirement. It was not uncommon for family to help in the purchase of their children’s first house. Now, it is becoming common for family to assist in living expenses and even a second house as their children’s family expands. This has resulted in the parents’ ability being reduced to finance their own retirement plans. As well, many of the older generation are working well past the normal retirement age of 65.
By the numbers over the past 10 years, the age of consumer debtors filing a bankruptcy or a consumer proposal has been decreasing for debtors under the age of 44. At the age of 45, the statistics start to change as the number of debtors filing bankruptcy or a consumer proposal have increased over the past 10 years. The largest increase is for seniors in the 65 + age bracket where filings have grown from 6.2% to 10% of the total filings.
A Registered Retirement Savings Plan (RRSP) provides annual tax benefits for saving for retirement. It is often suggested that couples set up an RRSP together: a spousal/common law RRSP, however, this type of investment assumes that partners will be together forever. The higher income earner (in this situation) benefits in the short term due to tax breaks. The lower income earner is supposed to benefit when they reach retirement. When setting up a plan such as this, make sure the plan actually benefits both parties in both the long and short term. If in fact this is uncertain (and most financial circumstances are difficult to determine), it may be best to set up a Tax Free Savings Account (TFSA) as a couple, this way both parties benefit equally.