Who Is Responsible For Debt After Separation? Understanding Your Rights and Obligations in Ontario

Jul 25, 2025

You’re in the process of separating and facing one of the biggest challenges. Separation and divorce are rarely easy. One of the key concerns we hear about as divorce lawyers in Toronto is who is responsible for debt after separation.

Separation isn’t only about dividing your assets, but also debts. It’s important to protect your financial future.

This guide explains how debt is treated in separation and divorce, what your rights and obligations are, and how your team of the best divorce lawyers at Kelly Jordan Family Law can help you navigate the process.

How Debt Is Treated in Ontario Family Law

In Ontario, family law doesn’t directly divide debts in the same way it divides property. Instead, debts are included in the calculation of net family property (NFP).

Each spouse calculates their own NFP, which includes:

Assets minus debts at the separation date
Minus assets minus debts at the date of marriage

The spouse with the higher NFP generally owes an equalization payment to the other. So this means that debts reduce your NFP, lowering your obligation (or increasing your claim).

What you need to know is that you are responsible for debts in your name. Joint debts remain joint. Now you understand who is responsible for the debt after separation.

Now, let’s look at the different types of debt and how they are affected by separation.

Types of Debt After Separation

Let’s look at the main categories of the types of debts you may be facing:

1. Joint Debts

If you and your partner have signed for a loan or credit card, the creditor can pursue either of you for the full amount. Even after separation, you are both legally responsible. Divorce doesn’t change this obligation with your lender.

For example, you co-signed a line of credit. Even if your separation agreement says your ex will pay it, the bank can still come after you if they default.

2. Individual Debts

Debts in your sole name are generally your responsibility. This includes credit cards, personal loans, or vehicle financing solely under your name.

However, these debts still reduce your NFP in equalization.

3. Matrimonial Home Mortgages

If both spouses are on the title and the mortgage, both remain responsible until the home is sold or refinanced. Failing to pay can damage both of your credit ratings.

4. Business Debts

Business loans or lines of credit personally guaranteed may also factor into equalization. If the business is family property, its value (and debts) are part of the calculation.

Commonly Asked Questions About Debt After Separation

When people search for who is responsible for the debt after separation, they also ask:

Can my spouse’s debts become my responsibility?

You are generally not responsible for debts in their name alone, but joint debts are shared. Equalization accounts for all debts in calculating fairness.

What if my spouse refuses to pay joint debts?

Creditors can demand full payment from either of you. You may have to pay and seek repayment from your ex via court if necessary. A clear separation agreement helps, but is not binding on the lender.

Does bankruptcy affect equalization?

If one spouse declares bankruptcy, it reduces their NFP. This can increase the equalization payment they owe, but you may lose the ability to collect if their bankruptcy discharges that obligation.

How Do You Protect Yourself from Debt After Separation?

It’s always wise to understand these insights as soon as possible to avoid costly surprises:

Get a credit report. Know all debts, including joint and individual.
Close or freeze joint accounts. Prevent new debts post-separation.
Negotiate in writing. A separation agreement can allocate responsibility, even if it can’t bind third-party creditors.
Work with a family lawyer. They’ll help you understand your rights, negotiate fair terms, and avoid future disputes.

When Should You Contact a Divorce Lawyer?

You will have many questions related to your separation and upcoming divorce. You should speak with a lawyer if:

You have significant joint debts
You’re unsure about obligations on the matrimonial home
Your ex is refusing to pay their share
You want to negotiate a separation agreement
Bankruptcy or insolvency is involved

Working with a lawyer will clarify your rights, help you avoid creditor surprises, and ensure your agreement is enforceable.

Overview Of Debt After Separation

Debt is often the most overlooked part of separation discussions. Yet it can have the biggest long-term impact on your credit and finances.

Key takeaways:

Debt in your name stays your responsibility
Joint debts remain joint—even if your separation agreement says otherwise
Equalization considers both debts and assets
Creditor agreements override private deals
The right legal advice can save you thousands

If you’re separating or considering divorce in Ontario, understanding who is responsible for debt after separation is vital. Don’t leave your financial future to chance. Speak to a divorce lawyer to get the guidance you need.

Get Help From The Best Divorce Lawyers In Toronto

If you’re facing separation or divorce and worried about a large amount of debt, it’s wise to invest in support from the best divorce lawyers.

Ontario’s equalization rules aim for fairness, but creditors don’t care about fairness. Their goal is payment, and they don’t delay.

Our divorce lawyers at Kelly Jordan Family Law can help you:

Understand Ontario’s Family Law Act and property division rules
Help identify all debts and assets
Draft comprehensive separation agreements addressing debts
Protect you from unfair settlements
Guide you on refinancing, indemnities, and enforcement

We have deep experience helping clients navigate the financial challenges of separation.

If you need legal advice regarding separation or divorce and your debt, contact us online or call our Toronto offices at 416-849-5501 to schedule a consultation. Let us provide you with the guidance and representation you need.