# How Does Debt Work in a Divorce in Ontario? People often focus on who gets the house or the pension in a divorce. But debt, including credit cards, lines of credit, car loans, and tax debt, can be just as important. In Ontario, debt affects both **property division** and your **day-to-day financial safety** after separation. This article explains, in plain language, how debt is treated when married spouses divorce in Ontario. Different rules may apply to common-law couples. ## The Basic Idea: Equalizing Net Family Property In Ontario, married spouses don't usually "split everything 50/50." Instead, the **Family Law Act** uses a formula called [equalization of net family property](/glossary#net-family-property) (NFP). In simple terms, each spouse calculates the value of what they **own** on the date of separation. They subtract what they **owe** (their debts) on that date. Certain adjustments are made for property they brought into the marriage and for some excluded assets. The spouse with the higher NFP usually pays the other spouse an **equalization payment**, so they each leave the marriage with **similar net value**, not half of each item. Debts matter because they reduce your net family property. ## How Debts Are Included in the Calculation When each spouse calculates their NFP, they list all property they own on the [valuation date](/glossary#valuation-date) (usually the date of separation), subtract their **debts and other liabilities** on that date, and adjust for property they had on the date of marriage and for certain types of excluded property. This means if you have a lot of debt on the date of separation, your NFP will be **lower**. If your spouse has less debt, their NFP will be **higher**, and they may owe you an equalization payment. Equalization is about the **difference** between your NFPs, not about splitting each line of debt. Think of it as comparing two balance sheets: one for you, one for your spouse. ## Who Is Responsible for Which Debts? Equalization is about fairness **between spouses**, not about your obligations to creditors like banks or the Canada Revenue Agency. You are generally responsible for debts **in your own name**. **Joint debts** such as a joint line of credit or a co-signed loan usually remain **joint**, even after separation. That means the creditor can often pursue **either** of you for **100%** of the outstanding amount if payments stop. A separation agreement or court order may say that one spouse will "take over" a particular joint debt, but if they don't pay, the lender can still come after the **other** joint borrower. Your **family law agreement or order** can decide who *should* pay a debt as between you and your ex. Your **creditor** still decides who is legally on the hook when payments are missed. This is why it's so important to think carefully before you agree to take on joint debt alone, and to get both **legal advice** and **financial advice** before signing. ## Time Limits to Make an Equalization Claim There are time limits for married spouses to ask a court for an equalization of net family property. If you wait too long, you may lose the right to claim an equalization payment, even if there was a big difference in your NFPs. Because time limits can be strict and facts-specific, it's important to [talk to a family law lawyer](/blog/how-to-choose-a-divorce-lawyer-in-ontario) as soon as possible after separation, especially if there is significant property or debt. ## Unequal Division in Special Cases While the starting point is an equal sharing of the increase in net family property, in **rare** cases a court can order an **unequal division** if an equal division would be **unconscionable** (grossly unfair). Examples might include situations where one spouse recklessly ran up large debts late in the marriage, one spouse deliberately hid or wasted assets, or there is serious financial misconduct tied to the marriage breakdown. Unequal division is not automatic, even in unfair-feeling situations, and the test is high. You would almost certainly need a family law lawyer to advise you if unequal division might apply in your case. ## Debt and Common-Law Relationships The rules described above apply to **married spouses** under Ontario's Family Law Act. If you are in a **common-law** relationship (not legally married), the rules about property and debt are different. There is generally **no automatic equalization** of net family property. Each partner usually keeps property and debts in their own name, unless you have an agreement that says otherwise. In some cases, a common-law partner may be able to make a **trust or unjust enrichment claim**, but this is a more complex area of law. If you are in a long-term common-law relationship with significant property or debt, speak to a lawyer early. Do **not** assume you have the same rights as a married spouse. ## Debt, Bankruptcy, and Support Sometimes debt after separation becomes overwhelming. In serious cases, people consider **insolvency options** such as consumer proposals or bankruptcy. A few important cautions: Many unsecured debts like credit cards can be reduced or discharged in insolvency, but **child support and spousal support** obligations are treated differently and generally **are not discharged**. Bankruptcy does **not** erase a court's ability to make or change support or equalization orders. If you or your ex go through insolvency, it can affect how equalization and property division work in practice. Because family law and insolvency law interact in complex ways, it is crucial to get advice both from a **family law lawyer** and a **licensed insolvency trustee** or other qualified financial professional. ## Practical Tips for Dealing with Debt at Separation Here are some practical actions if you're in Ontario and worried about debt in divorce. **Get a full picture of your debts.** Pull recent statements for **all** credit cards, lines of credit, car loans, tax debts, and personal loans. Make a list of which debts are in your name, in your spouse's name, or joint. This helps your lawyer and any financial professional understand the situation quickly. **Protect your credit where possible.** Ask lenders about options to freeze joint credit lines or close cards to **future use**, while still allowing regular payments. Try to keep at least **minimum payments** going on joint accounts until there is a clear plan, to reduce damage to both your credit ratings. You may also want to [set up your own bank account](/blog/should-i-get-my-own-bank-account-before-divorce) if you haven't already. **Get legal advice early.** Even if you can't afford full representation, a **consultation** with a family law lawyer can help you understand likely equalization outcomes, see how your debts might be treated, and plan safe next steps including how to deal with joint debts. **Consider financial counselling.** Non-profit credit counselling agencies can help you create a realistic budget, prioritize which debts to pay first, and explore options like debt management plans. A [Certified Divorce Financial Analyst](/blog/do-i-need-a-certified-divorce-financial-analyst-cdfa) can also help you understand the long-term financial picture. These professionals do not replace legal advice, but they can be a valuable part of your overall strategy. ## Key Takeaways In an Ontario divorce, **debts are part of the property division calculation**. They reduce each spouse's net family property and influence any equalization payment. You remain responsible for debts in your own name, and **joint debts stay joint** as far as creditors are concerned, even if your separation agreement says one person "takes over" the debt. In unusual cases involving serious financial misconduct, a court can order an **unequal division**, but the test is strict and legal advice is essential. Common-law partners usually do **not** have the same property and debt rights as married spouses. Insolvency options can help with some debts, but they generally do **not** erase child or spousal support obligations. The earlier you get **legal and financial advice**, the more options you will have to protect yourself.