Helping Your Spouse Recover from Bankruptcy

by admin on December 5, 2011

We could argue for a long time as to which form of infidelity is worse – financial infidelity or infidelity in the strictest sense of the word. In both cases, it is possible to get your life (and that of your partner) back on track and to overcome the damage. Again in both cases, this will take a lot of hard work for both of you.

If your spouse declares bankruptcy, it is very likely that you are going (or have gone) under too. The first step to rebuilding your spouse’s finances and credit is calculating exactly how much you have left to pay off and how long it will take. If you are still in the process of declaring bankruptcy, this probably won’t help much, but it will be helpful to the degree that you will not lose hope. And you should not, indeed. There is life after bankruptcy.

The next thing to do is figure out how much money you need to cover the necessary expenses. By this I mean the expenses you cannot do without. These include food, utility bills, shelter costs, insurance, child care and rent/ mortgage payments, as well as mandatory minimum loan or credit payments. Keep in mind that you may not be earning enough as a family even to cover must-haves. The latter expenses should not exceed 50 percent of your net income. A lot of people manage their debt successfully thanks to the 50-30-20 budget rule. The “50” in this rule goes for the maximum percent of your income that should go toward must have expenses. The “30” goes for wants – holidays, gifts, clothes, gadgets, and other unnecessary but pleasant little things. The last “20” goes for paying off debt. If your spouse has declared bankruptcy, he will most likely be relieved of paying a large portion of his debts, but he will still have to make some kind of payment, and it is probably going to be quite substantial. 20 of his income should go toward these debts.

Despite the difficult time you are having, you should set aside some money for an emergency fund as well. It does not have to be anything substantial – 700 Canadian dollars will do. Sustaining such a fund will help you start living from paycheck to paycheck and getting used to it.

It may be good to know that if you have not signed on a contract or agreement to this end, you are not responsible for your spouse’s debt by law. If you have a supplementary credit card that you have accumulated debt on, then you bear responsibility. Even though you are not responsible for his debt, his declaring bankruptcy will affect your day-to-day finances and family budget. What can you do? You can stand by him and support him as he goes through the steps of declaring bankruptcy. It is your duty, if you helped him get to where you both are. On the other hand, if you had no idea he was having financial problems, this can come as a shock that you need to cope with before you can give him a shoulder to cry on.

Comments on this entry are closed.

Previous post:

Next post: