Bankrupt divorcees can renege on equalization payments
Thinking of splitting up? Make sure you know what you’re doing – particularly if your soon-to be-ex is having some financial troubles.
Thanks to a recent Supreme Court of Canada, declaring bankruptcy after a divorce may help get you out of making certain settlement payments to an ex-spouse.
Going bust won't excuse a divorced man or woman from making alimony or direct support payments, but the rules are a bit different when it comes to equalization payments, a process designed to ensure that both spouses end up with similar net worth after they split.
Here’s a recent example that, on the surface, seems simply unfair.
After filing for divorce after 20 years of marriage, Susan Schreyer made an equalization claim against Anthony Schreyer, who owned the family farm.
Under their divorce agreement, the husband was to continue to live on the property, which he solely owned, and their assets were to be valued.
Before the evaluation of the land was completed though, the husband went bankrupt.
Even though the wife was subsequently entitled to an equalization payment of around $41,000, it disappeared along with all his other debts as a result of the bankruptcy. The husband was allowed to keep the farm, however, leaving her watching through the windows.
Des all this sound fair to you? Have you had a similar experience when a relationship ended? How were things resolved?
By Gordon Powers, MSN Money
Posted by: Steve | Sep 10, 2021 12:37:07 AM
Sounds fair enough. After all the wife in this case is no different than any other creditor who took a financial gamble and lost. Sucks, but that's captialism.
The biggest problem here isn't as a result of bankruptcy it is as a result of the idea instilled by courts across the land that divorce is a winning only lottery for women and a losing only lottery for men. Women are spoon fed the logic that from the second the man marries her 1/2+ of everything of his is hers and none of hers is his. Men are learning from this which is why so many men shun marriage and so many other men hop from woman to woman to have their families providing little useful info and leaving the welfare system (i.e. the taxpayer) to pick up the tab.
On the bright side the legal aid lawyers and taxpayer funded judges are always paid in full.
Posted by: Didn't run but left at a good pace | Sep 10, 2021 8:10:12 AM
THe whole family court system in Ontario is in disrepair as it is not equal . In fact it is unfair towards men. The courts have an unrealistic vision that men can live on a wage that are 50% garnished . If women and courts can not foresee a bankruptcy when 50 % of a wage is garnished, this scenario will"continue" to play out over and over again.
Glad that this decsicion "may" set off a few lightbulbs on the bench.
Posted by: Michelle | Sep 10, 2021 10:57:33 AM
Well. it works both ways. My soon to be ex-husband wants spousal support from me and my company shares. I was shocked, but apparently that is becoming more common. This sppon fed entitlement that Stave mentioned is a problem of society, not just women. The marriage/divorce legal relationship is a lottery win for many. And people should not shun away from marriage, just get rock solid pre-nups, so that the financial part of the relationship is negotiated on terms not dictated by the antiquated court system.
Posted by: Paying for ever...... | Sep 10, 2021 1:15:30 PM
I am a male that has fallen to similar fate. With the current separation and divorce laws, I am paying $1600 a month to a person that I was married to for many years. With her age and the amount of years married, the law states that I must pay the amount 'according to guidelines' for in undetermined amount of time. Considering that I have to keep up a benefit plan for her that is paid for by my very small business, my small business is going in the red and wont see too many more months. This will create a legal nightmare for me and no money for my former spouse in the future.
Posted by: Rhonnda REA | Sep 10, 2021 1:28:13 PM
Having learned the hard way about divorce, I can truthfully state that our rules need a great deal of reforming, even though the Family Law Reform Act of earlier years was an effort in the right direction,...it's rules were not always followed/applied. I fully believe that marriage should require extensive training classes beforehand,..no excuses/exceptions, and I don't mean just the effort that the Catholic Church requires!! Further, everyone should have a pre-nuptual agreement worked out with a lawyer and a psychologist. These requirements would save everyone a lot of pain and suffering, emotional and financial,...and probably put some lawyers out of business,...which wouldn't be so bad! I know whereof I speak,...I was married for 7 1/2 yrs., raised my son alone through University, cared for my elderly Mom for 17 of those yrs. and 31 yrs. later, have absolutely nothing to show for it all, except a place in Heaven! I am on Disability due to all the damage I experienced doing things for myself, etc., and I am too young to get a pension or any help from anywhere, while 'ex hubby' is raking in an income that he wouldn't have had if I hadn't put him through school, too! Are the courts FAIR? Are they JUST? Obviously NOT!!! OHHHHHHH, the details I could share with you,...you'd choke on the trash and stupidity of the divorce system and I can see, it isn't getting any better!!! Education/evaluation before marriage and more common sense on each individual basis inthe courts,...before people stop getting married, entirely, whcih means, we will have lost our sense of commitment,...maybe to everything?
Posted by: Fran | Sep 12, 2021 7:01:32 AM
How about my ex husband taking out a pension plan and paying my alimony with my own money on equalization. The courts had him pay me back over years and I don't have to equalize my pension because they penalized him.
Divorcing from a cheatiing abusive idiot was hard. The new wife (he got married before we were divorced) can have him.
I got my alimony and I'm good.
Posted by: mark | Sep 12, 2021 7:47:23 AM
ive been at the same job for years.....personally .....im not a dead beat dad....was a good husband and i am not abusive....do not do drugs and am not an alcoholic so if it was my situation i would say she got what she deserved......love and divorce suck.....system leans to much to the women due to abusive relationships and such.....but alot of men that are not that type of person are getting tired of being all painted with the same brush as cruel men and so on......finally after years of unfair decisions by the courts over money and custody.......the GOOD ex husbands and dads are getting a fair shake
Posted by: colleen | Sep 12, 2021 8:28:16 AM
Well I for one agree the rules need a great deal of reforming, even though the Family Law Reform Act of earlier years was an effort in the right direction,...it's rules were not always followed/applied. And it is so true the legal aid lawyers and taxpayer funded judges are always paid in full even the ones you don't get through legal aid get there money first. Why should a father get off scott free and not pay for his kids, and leave all the rasing to the mother to see them get an education; why should you have to go back to court over and over again costing money in order for the father to pay up for his kids. The courts should explain to the father where the money goes like rasing the kids and education. And shame on the fathers who have kids and expect the tax payer and welfare to pay for them this system should be abolished. Those men should be fixed so they can spread any more of there bad DNA around. That's why are taxes are so high because we are paying for other people to screw around and have kids and not pay for there obligations.
Posted by: penny | Sep 12, 2021 11:09:53 AM
Of course all the spouses that can get out of paying will love this. But is it fair. Put yourself in the others place. You shared years together, then to get a kick in the face.
I have an x that did EVERYTHING he could to make sure I got NOTHING. It cost him over $1000,000. plus a second mortgage on the family home that he got to keep. I do NOT have faith in the courts in this country, AT ALL. It is all about who's lawyer can lie better and what the judge believes. evidence got totally over looked in my divorce that left me with nothing. Not a penny. He got everything!
Why? He had a better lawyer, that happened to be friends with the judge.
Posted by: Yes Penny | Sep 12, 2021 1:43:31 PM
I only came here to read the comments.
I've had my own experience with lawyers. I agree with Penny. It's about who has the highest paid lawyer. It's a pity but that is the way our court systems work.
Posted by: Men are good fathers too!!!!! | Sep 12, 2021 2:53:40 PM
Our justice system needs a serious overhall. There are many good fathers out there and we are getting the shaft. Don't give up, I didn't and I will keep pushing forward to ensure my children get what they deserve. STAND FOR SOMETHING OR FALL FOR ANYTHING....No money is going to stop me from doing what is right. GOOD FATHERS NEED TO STAND UP FOR WHAT IS SUPPOSE TO BE AN EQUAL SOCIETY!!! FORM CLUBS, MEET WITH POLITICIANS, WORK TOGETHER TO STOP THE WOMEN WHO THINK THEY SHOULD GET EVERYTHING!!!!!!
Posted by: Dads are parents too | Sep 12, 2021 3:41:28 PM
I too went through family court recently and was not abusive/alcoholic anything, in fact I was (still am) a very involved father. The system is completely messed up. My ex sought advantage by making false claims that resulted in my arrest and thus an advantage for her in family court (the charges were later dismissed but the damage was done). On the financial side, SHE ended up owing me when it came to the net family property, but she hasn't paid a dime even though she was receiving nearly $2000/month in me for support (when I had the kids more than she did). Not to mention she got to go through court at no cost to her (legal aid) - right the taxpayers (including me) paid for that- whereas it cost my family $100k plus (and there go our kids; education funds!). The judge made many errors of fact and law in his decision but it would have cost me another $10k just to get it looked at. The introduction of the guidelines for support and no fault divorce have set our society down this path and I hope there is more in the way of civil suits against former partners (whether male or female) for false accusations (criminal) to gain advantage in family court (for a start). Furthermore, the court doesn't allow the working spouse to decrease their work to care for kids nor will it require the other parent to increase theirs. Basically court directed (spouse sponsored) welfare!
Posted by: Ann | Sep 12, 2021 4:50:56 PM
# 1 - 3/4 of laywers really are lazy asses they sit on their fat asses and let other people do all the work while they collect the money and they really over charge
# 2 - 3/4 of woman really don,t deserve any money for just being stay at home moms watching tv all day and spending their partners money on herself
# 3 - 3/4 of men are great fathers that deserve respect as they really do go through hell and are still going through hell because they married a bitch from hell
# 4 - NEVER get married or even live with anyone you will save yourself a bundle in the long run
# 5 - Have a contract made saying that whats mine is mine annd whats yours is yours thats what i call a 50/50 split and have both partys sign it and witnessed
# 6 - 3/4 of woman really are lasy ass bitches
The only deadbeats are the woman who think they are gods gift and that everything belongs to them no matter who they hurt they only really care for themselfs annd how much money they can steal from their man when she doesn,t want him anymore.To all you men stand up for your rights fight for whats yours don,t let a bitch take everything you worked hard for most of your life
Posted by: Juno | Sep 12, 2021 6:15:10 PM
Ann - are you serious or just crazy??? The women work much harder in their married lives compare to men. Men need to go to work and mostly concentrate only on their work - women think non-stop about what needs to be done and need to be extreme multitaskers to raise the kids. Having babies is not a piece of cake - it's a life commitment with all hard work required around it. The few "bad" moms are for sure out there but most women are hardworkers. The amount of work we do is equal to 2 full time jobs even if you are "only" a stay at home regular, dedicated and wife. So Ann - where the idea about us being "god's gift" and so on in your statement comes from? Obviously you need to check your mental health before you tend to write something on public pages. Good luck with your pathetic life and keep your ideas to yourself.
Posted by: Heather | Sep 12, 2021 6:53:12 PM
The underlying issue in the "Family Court" is that there is absolutely no protection for the spouse who is on the losing side of bankruptcy, or consumer proposal.
For example: (This is a situation without children)
If the spouse who is in possession of the matrimonial home, refuses to sign a separation agreement, then defaults on every joint debt, then files a consumer proposal, without the separation agreement in place, while the other spouse is waiting for the family court system to churn out a decision, on a relatively simple case. There is absolutely nothing you can do. You can continue to pay the debt, but that doesn't get you anywhere, on account that the banks now file a judgement against you for the full amount owing.
After more than a year in the "system" there is still no separation agreement, and the only decision that can be made, is filing for your own bankruptcy. How is that right? The spouse in this situation with the matrimonial home, also makes 3 times the income ($100000 +) than the other, and yet there is no immediate protection from the banks, or the ex who racks up huge debt on joint accounts.
Posted by: Elmo | Sep 12, 2021 8:08:08 PM
Live Single... Live Longer... and Prosper. Why buy (or marry) the cow... when you can get the milk for free... or a heck of a lot less than It'll cost you if you do get "hitched".
Posted by: To Ann: | Sep 12, 2021 8:15:23 PM
Are you sure you are female? kidding.
I'm a female also and agree with you. I know too many women who have taken their husbands and now live off of alimony and go through boyfriends, while their "ex" husband works tirelessly to make ends meet.
Good for you for raising the issue.
Posted by: A divorcee | Sep 12, 2021 10:30:50 PM
Thanks to Ann...I am a divorced mother and am now married to a divorced man so I've been on both sides of the fence, and while the present system was meant to even things out for the women who got nothing, it now has really gone so much the other way that most men wind up going through bankruptcy.
Posted by: Blaine | Sep 14, 2021 8:57:15 AM
I married a bitch from hell...I was the worker in the family and after work, would come home, cook supper, do laundry, vacumn, pick my kids off the school bus, etc. I was the one who taught them to tie their shoes, tell the time, count, rides their bikes, skate, and the list goes on and on. My ex, during the day, would tea toddle at neighbors houses while I was at work and would have accomplished very little during her day at home. If I made $100, she spent $120. I was forever in the hole. Had a Visa bill for 17 years and could never get it paid off. And when I finally left, thanks to the courts, I swallowed most of the bills. I got nothing from the marital home and left with 2 suitcases of my clothing and that was it. My lawyers over the years cost me my retirement. I lost 100K of my military pension, half of my severence package, and 12 years worth of child support. At first, I was a better father to my young daughters as a divorced dad then I would have been had I stayed married. My ex, being bi-polar, fixed that over the years. My girls, now 23 and 21, haven't spoken to me in over 4 years but I still pay support for one of them (post secondary) Go figure. Penny has it right. Its not about black and white when it comes to family law. Its all about who has the best lawyer and who cries fowl the loudest. Back in the day I could never understand how one spouse could iinflict bodily harm on another, even to the extent of killing another person. After everything I've been through the last 12 years, I can totally understand it now. Thankfully I now have a great woman in my life who keeps me grounded. Back in the day though, I was on the verge of a mental breakdown and could have been capable of anything. I guess I should consider myself lucky, or maybe my ex should.
Posted by: Mike | Jan 9, 2022 11:45:25 AM
Why can't women just pay their own way? why demand anything? take your 50% of equity and 50% debt and get on with your life
here's something the courts could change , if a man has to pay say 1200 a month child support does the woman also put 1200 in? so the child has 2400 a month to take care of his up bring?
do it on your own stop being a leech ,