When one spouse declares bankruptcy either before, during or after a relationship it can affect the other spouse’s rights to property and spousal maintenance.
Spousal maintenance claims do survive a declaration of bankruptcy if there are periodic or monthly payments and a spouse cannot get rid of their obligation to pay spousal maintenance by declaring bankruptcy. Lump sum spousal maintenance payments however may not survive.
Property claims can be affected by bankruptcy. When a person declares bankruptcy there is a stay of proceedings which prevents one spouse claiming an interest in the assets which are owned by the bankrupt. A spouse’s claim to property may be shared with the other unsecured creditors if they are able to prove their claim before the bankruptcy is concluded.
Some assets like RRSPs and pensions are “exempt” from the bankruptcy however and spouses may be able to pursue a claim against these assets.
Deborah A. Todd
