Debt is a small word that carries an enormous impact! If you are reading this blog it is likely because you are feeling uneasy and wondering how debt accumulated during the course of your relationship will be divided as part of your divorce or separation.
Debt can be broken down into a couple of categories:
- Debt acquired during the course of the relationship.
- Debt acquired after separation has taken place, but, before a divorce or legal separation has been finalized.
For the purpose of this post, we will focus on the first category. Debt acquired after separation will be the subject of a later post.
The current law:
The Alberta Family Property Act (FPA) came into effect on January 1st, 2020 effectively replacing the Matrimonial Property Act (MPA) and outlines how the division of property is to be handled in any divorce or separation taking place after this date. This means that the FPA applies to any married couple OR to any couple that is deemed to be in an adult interdependent relationship. For reference, an adult interdependent relationship is one in which:
- the partners have lived together, unmarried, for 3 or more years continuously, or
- the partners have a child resulting from their relationship
For the purpose of this blog topic section 7(4) of the FPA is relevant and stipulates that property acquired during the relationship by either one, or both of the spouses, is to be divided equally unless the court determines that this would not be “just and equitable”.
Before we go on we’d like to point you to our previous blog post Dividing family property: what you need to know . This post will provide you with more general information on both the division and categories of family property.
Is debt property?
When considering the division of property in a separation or divorce it is important to understand that “property” doesn’t only mean assets, it also means debts. As outlined above, section 7(4) means that debt, whether individually or jointly held, is included in the division of property.
Simply put, debt incurred during the course of a relationship is generally split between the parties, even if it was only held in one person’s name.
What would happen if I didn’t know about the debt?
“just and equitable”
These three words give the court discretion when considering the division of property and allow the court to order an unequal division if doing so would make for a “just and equitable” outcome. Section 8 of the FPA provides the court with factors to consider when making this determination. Specifically, the following two sections are of interest when considering the division of debt:
- S. 8(l) – This section allows for the consideration of property that has been “dissipated” by one of the spouses with detrimental consequences to the other spouse.
- S. 8(m) – This section calls for the consideration of “any fact or circumstance that is relevant”.
Understanding if the facts surrounding your divorce or separation that may give rise to an unequal division of property requires the assistance of an experienced family or divorce lawyer. At Hayes-Fry law we have extensive experience helping parties navigate this process and will work with you to assess your situation, build a case, and provide guidance on the appropriate next steps. To book a consultation please give our office a call today at 780.831.7370 or email reception@HayesFryLaw.ca.
The following resources were relied on in the preparation of this blog:
- Adult Interdependent Relationships Act, SA 2002, c A-4.5, s. 3(1).
- Family Property Act, RSA 2000, c F-4.7.