Usually when we meet with individuals who are married or in a relationship their debts are often jointly held, but this is not always the case. Either way, I have met many couples that are completely supportive of each other, but unfortunately, I have also seen situations where there is no support, only a lot of resentment and bitterness. In my experience, it is much better to work together to solve your financial problems than it is to consider each person’s debt issues as his or her own problem. Here is a short example as to why.
I remember one evening several years ago I answered a telephone call from someone looking for information for herself and her husband. We will call them Barb and Robert. Barb told me that she owed about $85,000 to her creditors and her husband owed $100,000 to his creditors. They were both working full time, had three kids and owned a house. We had a lengthy conversation and I explained how a consumer proposal worked and the benefit of filing a joint proposal to deal with all of their debt together. She appreciated the information, but was not yet ready to come in for a consultation. This is not unusual. People often call and then want to think about it and discuss it with their spouse. In fact, we recommend that approach. After all, these are family debts and should therefore be solved together. Unfortunately, that is not quite what happened.
About a week later she emailed me to say that they were able to work out some financing and therefore would not be needing our services.
Many months later I met with Robert. During our consultation I realized that this was Barb’s husband. Robert did not know that I had spoken to his wife several months earlier. Robert’s situation was dire. He advised that he had $100,000 of debt and was recently laid off of work. During our consultation he advised that his wife also had considerable debt, but that she had recently gotten a loan which was co-signed by one of her family members to consolidate only her debts.
Her loan payments were enormous. After paying her loan payments she could barely help with their family’s expenses. Robert’s EI payments had to be used to pay their mortgage, leaving him unable to pay his creditors.
Robert had no choice but to file for bankruptcy. When he told his wife she was very upset with him.
The logical way to deal with their debts would have been to file a joint consumer proposal. If Barb had come in for a consultation with Robert when they first realized they had a problem, things would have turned out differently. They would have been able to settle their debts for far less than they owed and would have had a manageable monthly payment. Dealing with their problem individually was not the right solution.
As a result of their unwillingness to work together, their marriage did not survive. Maybe their marriage was doomed before this happened, maybe it failed because of the financial strain.
What could Barb & Robert have done differently? To start, they should have discussed their finances as a family. Even though each of them had debts of their own, repayment is best done by working as a family unit. This includes preparing a family budget and talking to a trustee together. If they had talked together about Barb’s conversation with our office, perhaps they would have dealt with their financial problems before Robert’s layoff, reducing the toll that the event had on their finances and potentially their marriage.
Communication is key. These debts are often created together, but even if they weren’t, they are always much easier to deal with if you work as a team. For more information about joint filing, contact a Toronto trustee in bankruptcy to book a free consultation to review your financial situation. Let us become part of your team and find a solution that is right for your whole family.