Difference between revisions of "Protecting Property and Debt in Family Law Matters"

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#separate from your spouse, to convert the ownership of all property to a shared ownership between you and your spouse as tenants in common,
#separate from your spouse, to convert the ownership of all property to a shared ownership between you and your spouse as tenants in common,
#register a CPL against all real property in which your spouse has an interest, and
#register a CPL against all real property in which your spouse has an interest, and
#obtain a financial restraining order under one or more of s. 91 of the ''Family Law Act'', s. 39 of the ''Law and Equity Act'' or Rule 12-4 of the Supreme Court Family Rules.
#obtain a financial restraining order under one or more of s. 91 of the ''Family Law Act'', s. 39 of the ''Law and Equity Act'', or Rule 12-4 of the Supreme Court Family Rules.


The problem here is that property that is owned only by your spouse, or by both of you as joint tenants, may be vulnerable to your spouse's creditors and in the event of their bankruptcy. Say, for example, your spouse has put up their car as collateral for a loan. You would normally be entitled to one-half the car's value as a family property, assuming the car was bought during your relationship. If your spouse defaults on the loan, the car can be seized and you could find, especially where there are few other assets, that you get no compensation for your interest in the car's value once the lender's default fees and legal fees are added on.
The problem here is that property that is owned only by your spouse, or by both of you as joint tenants, may be vulnerable to your spouse's creditors and in the event of their bankruptcy. Say, for example, your spouse has put up their car as collateral for a loan. You would normally be entitled to one-half the car's value as a family property, assuming the car was bought during your relationship. If your spouse defaults on the loan, the car can be seized and you could find, especially where there are few other assets, that you get no compensation for your interest in the car's value once the lender's default fees and legal fees are added on.


Your spouse's creditors or trustee in bankruptcy will not usually be able to seize assets held only in your name, or your interest in property as a tenant in common, unless you are responsible for your spouse's debts for some reason, like having co-signed or guaranteed a loan, or having used a secondary credit card on your spouse's <span class="noglossary">account</span>. Although, under the ''Family Law Act'' both spouses are responsible for the debts incurred during their relationship, this obligation is only between spouses and doesn't give any extra rights to creditors.
Your spouse's creditors or trustee in bankruptcy will not usually be able to seize assets held only in your name, or your interest in property as a tenant in common, unless you are responsible for your spouse's debts for some reason, like having co-signed or guaranteed a loan, or having used a secondary credit card on your spouse's <span class="noglossary">account</span>. Although under the ''Family Law Act'' both spouses are responsible for the debts incurred during their relationship, this obligation is only between spouses and doesn't give any extra rights to creditors.


===Creditors===
===Creditors===


Creditors have a wide range of remedies available to them when a debtor fails to live up to the conditions of a loan, a line of credit or a credit card. Among other things, a creditor can:
Creditors have a wide range of remedies available to them when a debtor fails to live up to the conditions of a loan, a line of credit, or a credit card. Among other things, a creditor can:


*seize any asset put up as collateral on the loan,
*seize any asset put up as collateral on the loan,
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If an asset is family property, the transfer of the asset to the trustee may deprive the other spouse of any interest they might have in that asset and, since the owning spouse is bankrupt, they may not have any other financial resources from which to compensate the non-bankrupt spouse for the lost interest.
If an asset is family property, the transfer of the asset to the trustee may deprive the other spouse of any interest they might have in that asset and, since the owning spouse is bankrupt, they may not have any other financial resources from which to compensate the non-bankrupt spouse for the lost interest.


A trustee in bankruptcy cannot take property that doesn't belong to the bankrupt. If the spouses separate before the bankruptcy, only the bankrupt's one-half interest in the family as a tenant in common will go to the trustee.
A trustee in bankruptcy cannot take property that doesn't belong to the bankrupt. If the spouses separate before the bankruptcy, only the bankrupt's one-half interest in the family property as a tenant in common will go to the trustee.


==Protecting property outside British Columbia==
==Protecting property outside British Columbia==

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