Protect Yourself from Debt Following a Breakup
People get together and form couples. They end up sharing a lot and keeping some things separate. Statistics say that between 35% and 42% of marriages are projected to end in divorce before the thirtieth wedding anniversary. Breakup rates for common-law and conjugal relationships are similar or slightly higher.
The purpose of this article is not to instruct individuals going into a relationship of ways to ensure they are prepared for the day when the relationship will breakup. Rather we at Moses Advisory group Inc. see the glass half full and hope that all relationships are going to be in the 60% and stay married for 30 years or more.
However, you may come to a point in time when the relationship is headed for the parties moving in different directions. This is a time that we say both parties should be looking at ways to ensure the separation is done in an equitable manner.
Most of the separation of property takes place under the guidance of Matrimonial Property Act for married couples. Things are a little more uncertain for those in conjugal and common-law relationships. In many relationship breakups where there are assets or significant joint debts, there are undertakings (agreements) where each party accepts which assets and which liabilities they will take possession of and agree to be responsible for the repayment of.
Unfortunately there are no consequences other than additional litigation should either of the parties fail to live up to the obligations of the agreement.
For the most part there is agreement and compliance as to which assets will go with which party. The hidden landmine, for either party, occurs when the other party fails to fulfill their obligations to continue servicing the joint debts that they had agreed to be responsible for.
An example of this would be where a couple has two joint credit cards, each with a balance of approximately $20,000. Each party agrees to be responsible for the repayment of one of the cards. At some point one party stops making payments and the creditor initiates collection actions which not only include the party who indicated they would take responsibility but also you as the co-debtor. You’d been making accelerated payments on the card you agreed to be responsible for to get the balance low. Now all of a sudden you are fully responsible for the other $20,000, and your previous partner has only been making minimum payments. This is the kind of surprise no one wants to encounter.
Another possible negative consequence is as you are paying down your credit card your ex-partner is continuing to use the available credit on the card therefore pushing the indebtedness of the card you agreed to be responsible for back to its original debt level or even higher.
We at Moses Advisory Group Inc. would suggest that any couple, be they married or in a common-law or in a conjugal relationship, seriously consider filing independent proposals to their joint debt creditors as part of their financial separation arrangements. Being a federally licensed administrator of proposals, Moses Advisory Group Inc. can develop a creditor and court-approved arrangement for the repayment of these unsecured debts.
The advantage of these court-approved proposals is that should one party fail to live up to their proposal payment obligations, the creditors only have the ability to take actions against that party. As long as the other party continues to meet their proposal payment obligations no further actions can be taken by any of the joint creditors for failure of the joint partner to meet their proposal obligations. Therefore by entering into court-approved proposals each party does not have to worry about any joint creditors commencing any further actions against them as long as they maintain their proposal payment obligations.
These proposals are structured so as to reflect the relative ability of each party to repay the debt, therefore the proposals are design to meet the cash-flow considerations of each party so as to ensure the long-term viability of the proposal.
By working with Moses Advisor Group Inc. each party can ensure that they're moving forward on their own and on the best financial foundation possible given the circumstances.
For further information about investigating the possibilities of filing creditor proposals please feel free to contact our senior government license professional staff who would be happy to review this option and others.