In New Brunswick, debts acquired during the marriage are generally considered marital debts and are divided equally, even if only one spouse’s name is on the loan. The Court of King’s Bench handles these divisions under the Marital Property Act.
Going through a separation is an incredibly emotional experience, and worrying about finances often adds a heavy burden to an already stressful situation. One of the most common and pressing concerns for separating couples in New Brunswick is figuring out who is responsible for shared credit cards, mortgages, and personal loans.
Understanding your rights and obligations regarding marital debt is crucial to protecting your financial future and maintaining your credit score. In this guide, we will explain in plain English how shared debt is handled after separation under New Brunswick family law, so you can confidently take the right steps forward.
Step-by-Step Process for Handling Debt in New Brunswick
Whether your family home is in Moncton, Fredericton, or Saint John, the legal rules surrounding family debt generally remain the same across the province. Under the Marital Property Act of New Brunswick, assets and debts accumulated during the marriage are typically shared 50/50. Here is how you can effectively manage this process.
Step 1: Identify and Document All Marital Debts
The very first step is to gather a complete and honest picture of your financial situation. You and your ex-spouse must disclose all debts held both individually and jointly . This comprehensive list should include mortgages, car loans, credit card balances, lines of credit, student loans, and even tax debts owed to the CRA. Pulling a free credit report from Equifax or TransUnion Canada can help ensure no hidden debts are forgotten.
Step 2: Close or Freeze Joint Accounts
To prevent your ex-spouse from accumulating more debt in your shared name, it is highly recommended to contact your bank immediately. You can request to freeze joint lines of credit or lower the credit limits on joint credit cards. This proactive financial behaviour ensures that the marital debt pool does not silently grow while you are busy negotiating a settlement.
Step 3: Negotiate a Separation Agreement
Most couples in New Brunswick choose to resolve their debt division out of court by drafting a separation agreement with the help of a family lawyer. This legally binding document outlines exactly who will pay which debt and handles issues like spousal support and parenting time. Once signed, it provides immense clarity and protects both parties. If you absolutely cannot agree, you may need to apply to the Court of King’s Bench for a judge to make a final ruling.
Step 4: Update Your Status with the CRA
Do not forget to notify the Canada Revenue Agency (CRA) about your change in marital status. Once you have been living apart for 90 days, updating your status ensures you receive the correct amount for the Canada Child Benefit (CCB) and GST/HST credits, which can provide a much-needed financial buffer as you handle your new independent expenses.
Types of Debt: Joint vs. Individual
It is a common misconception that a debt is solely yours just because only your name is on the account. Family law looks at the purpose of the debt. Here is a general breakdown:
| Type of Debt | Who is Responsible? |
|---|---|
| Joint Credit Cards & Mortgages | Both spouses are equally legally responsible for the full amount to the bank, regardless of who actually spent the money. |
| Individual Credit Cards (Family Use) | If the money was used for household expenses, groceries, or family renovations, it is generally considered family debt and divided 50/50. |
| Pre-Marriage Debt & Student Loans | Debt acquired before the marriage, or specific individual student loans, is usually the responsibility of the person who incurred it, unless marital funds heavily subsidized it. |
How Much Does it Cost in New Brunswick?
Resolving debt division can vary widely in cost depending on how cooperative both parties are during the process:
- Separation Agreement Drafting: A local family lawyer will typically charge between $1,500 CAD and $3,500 CAD to draft a comprehensive agreement that protects your financial interests.
- Mediation Services: If you need neutral help reaching a fair agreement, hiring a mediator often costs between $150 CAD and $350 CAD per hour.
- Court Litigation: If you must fight over debt division at the Court of King’s Bench, legal fees and court disbursements can easily exceed $10,000 CAD per person.
How Long Does the Process Take?
If you and your ex-spouse are amicable, drafting and signing a separation agreement regarding debt can take as little as 1 to 3 months. However, if there are complex hidden debts, allegations of reckless spending, or significant disagreements, the legal process can drag on for over a year, especially if you have to wait for available court dates at your local courthouse.
Frequently Asked Questions (FAQ)
What if my ex-spouse racks up secret debt?
If your spouse secretly accumulated debt for non-family purposes (such as gambling addictions or funding a secret affair), a judge at the Court of King’s Bench may rule that you are not responsible for half of that specific debt. However, you will need to provide solid financial evidence to the court.
Will a separation agreement automatically protect my credit score?
No. A separation agreement is binding between you and your ex-spouse, but it does not change your original contract with the bank. If your ex agrees to pay a joint debt but misses a payment, the bank can and will report the missed payment on your credit file. It is often safest to refinance and separate debts entirely.
Does moving out of the family home affect my responsibility for the mortgage?
Moving out does not magically remove your name from the mortgage or relieve your legal obligation to the mortgage lender. You and your ex-spouse must decide whether to sell the property entirely, or if one person will buy out the other’s share and formally refinance the mortgage into their single name.
Can I stop my spouse from using my credit card?
If your spouse is an authorized user on a credit card where you are the primary account holder, you have the full legal right to call the bank and have their access removed immediately. This is a vital step to protect yourself from post-separation reckless spending.
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