Your consumer proposal deals with your debts. It does not deal with debts that are not your debts.
If you have a debt that is joint with your spouse (such as a line of credit that is in both of your names), your proposal deals with your debt. Once the proposal is accepted, the bank will not pursue you for any money. However, if your spouse did not file a proposal, they remain liable for the debt, so the bank can pursue them.
So, if you have joint debts, it may be wise for both of you to file a joint proposal (that’s one proposal for both of you, covering all of your debts).
What if my spouse did not co-sign my debts?
If your spouse did not co-sign for your debts, your spouse is not directly affected by your proposal. Your proposal appears on your credit report, but it does not appear on your spouse’s credit report.
It’s a common misconception that if you are married, your spouse is automatically responsible for your debts. That is not true. You are only responsible for a debt if you have signed for the debt. Being married does not automatically make you responsible for your spouse’s debts.
Even though your spouse is not directly affected by your debts or your proposal, they are indirectly affected. If in the future you want to get a mortgage together, your credit rating will not be as good as if you had not filed a proposal (until the proposal is completed and your debts are cleared). So, in the short term, you will not be good co-signer.
However, in the longer term, dealing with your debts means you are no longer struggling to pay your bills, and that is a very positive development for you and your family. If you would like to talk about how a consumer proposal can help you improve your family finances, contact us today for a free, confidential consultation.