BNN Bloomberg: Debt and Divorce - Insights from Shulman & Partners

As household debt continues to climb across Canada, financial pressure is becoming an increasingly common factor in family breakdowns. Rising borrowing costs, large mortgages, and unsecured debt are complicating separations and divorces, particularly for couples who expected shared incomes to offset long-term liabilities. In Ontario, where housing prices and consumer debt remain among the highest in the country, many separating couples are discovering that debt can be just as difficult to untangle as property or parenting arrangements.

On BNN Bloomberg, Shulman & Partners LLP shed light on how debt is treated when relationships end, and why misunderstandings about shared responsibility often lead to added conflict. The discussion explored how provincial rules differ, why Ontario handles debt differently than some other jurisdictions, and what separating spouses should consider when facing significant liabilities with limited assets.

The interview focused on how rising household debt has become one of the most challenging issues facing separating couples today. Shulman & Partners LLP explained that many individuals now leave long-term relationships carrying substantial debt but little or no equity, creating serious financial stress at a time when incomes are often reduced.

A key point addressed was the widespread misconception that debt is automatically divided equally after separation. In Ontario, there is no formal concept of “family debt.” Instead, responsibility generally follows legal ownership. Creditors are entitled to pursue only the individual who signed for the debt, regardless of whether the debt was incurred during the relationship or used for family purposes. This means one spouse may walk away with a disproportionate debt burden, even after a long marriage.

The discussion contrasted Ontario’s approach with other provinces, such as British Columbia, where both assets and debts are divided equally. This distinction can come as a surprise to couples who assume separation rules are consistent across Canada.

Mortgage debt was another major focus, particularly given the size of loans many couples carry in major urban centres. Where only one spouse is listed on a mortgage or loan, that individual remains fully responsible in the eyes of the lender, even after separation. While family law may account for debt when dividing assets between married spouses through net family property calculations, this does not change the creditor’s rights.

Finally, Shulman & Partners LLP emphasized that high debt loads often intensify conflict during separation. Couples are forced to confront difficult questions about financial survival, housing stability, and long-term planning. Seeking guidance from both family lawyers and financial advisors was highlighted as an important step in understanding post-separation realities and making informed decisions.