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Difference between revisions of "Protecting Property and Debt in Family Law Matters"
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Protecting Property and Debt in Family Law Matters (view source)
Revision as of 23:02, 18 July 2019
, 23:02, 18 July 2019→Debts, bankruptcies and third-party claims
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==Debts, bankruptcies and third-party claims== | ==Debts, bankruptcies and third-party claims== | ||
Apart from the possibility that your spouse will be less than forthright in dealing with the family property and family debt, you may also need to protect your interest in those assets from claims made by creditors and third parties | Apart from the possibility that your spouse will be less than forthright in dealing with the family property and family debt, you may also need to protect your interest in those assets from claims made by creditors and third parties. If your spouse is heading towards bankruptcy and racking up further debt, this is extra important. These issues can be dealt with, for the most part, by ensuring that you: | ||
#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, | ||
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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. | ||
For assets that are held only in your name, your spouse's creditors or trustee in bankruptcy will not usually be able to seize them. The same goes for your interest in property as a ''tenant in common'' (which the law would call a ''divided interest''), unless you are responsible for your spouse's debts for some reason (such as if you co-signed or guaranteed a loan, or used a secondary credit card on your spouse's <span class="noglossary">account</span>). | |||
When it comes to the ''Family Law Act'', both spouses are responsible to ''one another'' for debts incurred during the relationship, but the act itself doesn't give any extra rights to creditors to go after a spouse of the debtor. | |||
===Creditors=== | ===Creditors=== | ||