Divorce and Bankruptcy Law in Canada.

• Date: 01 September 2016
• Author: Hoyes, Doug J.

Almost one in five insolvencies in Canada (a bankruptcy or consumer proposal) involves someone who has experienced a marital or relationship breakdown. Often the financial problems occurred long before the divorce. Financial pressures often increase after divorce as two households are now trying to live on the same income as one household did before the separation. When these problems become severe enough to lead to the insolvency of one or both ex-partners, there are special legal complications when it comes to divorce and bankruptcy that need to be considered.

Alimony and child support

Some insolvent individuals have fallen behind in their alimony and child support payments. It is important to note that alimony and child support payments are not discharged in bankruptcy. However, if you are responsible for child support or alimony and you file for bankruptcy, you can deduct the payments from your income when your licensed insolvency trustee is calculating the cost of bankruptcy. For example, if you make net $3000 a month but owe $800 a month in alimony and child support, you can deduct the payments from your monthly...