Joint vs. Personal Bankruptcy – Which Is Better?

There is a common misconception about bankruptcy in Canada. If you’re thinking of filing for personal bankruptcy, your spouse won’t have to declare bankruptcy in tandem. This is because personal bankruptcy is very different than joint bankruptcy.

Credit counsellor, EmpireOne, advises clients against declaring bankruptcy. However, in special cases, it’s actually the only option left. So what is the better option?

What Is Joint Bankruptcy?

You can file for bankruptcy along with your spouse, aside from an individual declaration. People who have joint accounts file this kind of bankruptcy most, as compared to personal bankruptcy.

When Can You File Joint Bankruptcy?

Declaring joint bankruptcy makes the most sense when majority (or all) of debt is shared by both individuals. Of course, you can head over to a trustee administering the bankruptcy filing procedure to gain counselling on the matter.

Pros & Cons of Joint Bankruptcy

Understanding the advantages and disadvantages of joint bankruptcy will help you discern which road to take. Advantages are:

Reduction in Fees

This is the most important advantage. In Canada, filing for bankruptcy is a procedure that requires the debtor to pay a certain amount in administration fees. One procedure for two people is likely going to cost the same as the procedure for the individual debtor!

Filing for bankruptcy separately means paying the basic filing costs, twice. Let’s now discuss the disadvantages of filing for joint bankruptcy.

Both Spouse’s Procedures Are Tied Together

If one spouse fails to file all the required paperwork, the other spouse won’t be eligible for bankruptcy discharge either. This is why couples experiencing marital issues or in the middle of divorce shouldn’t opt for this option.

Couples usually file for joint bankruptcy to share the ‘joint debts’ between a bankrupt spouse and a non-bankrupt one. This means both are responsible for paying the full amount, even if one spouse goes bankrupt, on account of co-signing on a loan.

It’s always a good idea to talk to a trustee when considering your options. Ask the following:

  • If you are eligible to file for joint bankruptcy
  • Whether your unique situation calls for joint bankruptcy
  • Whether both spouses should file for joint bankruptcy

You can also opt for a debt repayment plan with help of EmpireOne if you don’t wish to file bankruptcy. Get in touch with us today!



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