Bankruptcy and Support Obligations

On behalf of Osuji & Smith posted in Family Law on Tuesday, September 11, 2018.

Separation may impose additional financial burden on people, especially when a separated/divorced parent needs to pay spousal/partner support or child support. This is understandable because the support payor would generally find it very difficult to maintain the same lifestyle he or she had prior to the separation. 

Sometimes, people ask what happens to their spousal support obligation if they declare bankruptcy. The short answer is that bankruptcy does not dispense with support obligations.

Perhaps, the parliament, when drafting the Bankruptcy and Insolvency Act, contemplated such situation where a payor tries to avoid his or her financial obligation to their ex and the children. Under the Act, such support is exempt from bankruptcy. In fact, the support arrears will continue to accumulate with interest. Even if the payor is discharged from bankruptcy, the support arrears (with interest) will remain payable. 

In short, bankruptcy is not an option for anyone who wishes to minimize or reduce their support obligations. They should contact a lawyer and consider applying to court to vary their support obligations if they have evidence that supports the said variation application. 

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