“Ah, yes, divorce . . . from the Latin word meaning to rip out a man’s genitals through his wallet”. Robin Williams
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Does bankruptcy and divorce together work?
The movies “War of the Roses” and “First Wives Club” were great comedies, but they were also sad commentaries on how down and dirty some divorces can really get. There seems to be no length that some people, mostly husbands, will go to in order to avoid paying or minimizing spousal support. Some of these divorce warriors would even declare bankruptcy in the mistaken belief that a bankruptcy and divorce in Canada will prove to the Family Court that with no assets and minimal if any income, they should be freed from the shackles of spousal support payments.
Declaring bankruptcy will not absolve you of spousal and child support. So for that purpose, bankruptcy and divorce don’t work together. In fact, the Bankruptcy and Insolvency Act defines support payments as one obligation that is not discharged by a bankruptcy and bankruptcy may make things worse. Family Courts tend to look at the bankrupt spouse as better able to keep current on their support payments now that they have been absolved of their debts. Bankruptcy legislation and the Bankruptcy Court tend not to interfere with or attempt to alter the normal outcome in Family Court. The only way to vary a support order is through the rules and procedures of the Family Court. So for this example, bankruptcy and divorce may hurt, not help.
Being an undischarged bankrupt will have no sway with the Family Court when it comes to support. The Family Court will look at the lifestyle the family enjoyed prior to the separation date and the income of the spouses prior to the bankruptcy date as being more indicative of the lifestyle to be enjoyed by the parties in the future. So again, bankruptcy and divorce doesn’t work hand-in-hand.
Bankruptcy and divorce will not remove your obligation to pay child or spousal support. In addition bankruptcy and divorce will not remove your obligation to pay any arrears that may have accumulated. Therefore, bankruptcy and divorce is not a quick fix or panacea to avoid Family Law support obligations. However, if you have other debts that are crushing you or you are insolvent, we can help. Contact Ira Smith Trustee & Receiver to tackle your financial problems Starting Over, Starting Now.
