Dividing assets gets most of the attention in a divorce, but debt gets divided too, and it carries a catch most people don't expect: a divorce settlement can decide who owes what between the two spouses, but it doesn't change what a lender is entitled to collect from each of them.
In Alberta, debts are considered alongside assets when property is divided, so a settlement or court order can assign responsibility for joint debts to one or both spouses. That assignment binds the spouses, not the creditor, so a lender can still pursue either person on a joint debt until it's paid off, refinanced, or formally transferred. A divorce lawyer in Calgary can help structure the division so it holds up.
Alberta's Family Property Act looks at the overall financial picture, which means what a couple owes matters as much as what they own. Instead of dividing assets and then handling debt as an afterthought, a division of property considers debts against the assets they relate to. A mortgage reduces the value of the home being divided, and a line of credit used for family expenses is part of the overall picture rather than one spouse's problem by default.
This is the point that surprises people most. A separation agreement or court order can say that one spouse is responsible for a joint credit card or line of credit, and that's binding between the two spouses.
The lender, however, wasn't part of that agreement. If both names are on the account, the lender can still collect from either spouse, regardless of what the divorce paperwork says. If the spouse who was assigned the debt stops paying, the other spouse's credit and finances can still be affected.
When a home or another asset is sold as part of the divorce, the proceeds can be used to pay off the mortgage, lines of credit, or other joint debts before the remainder is divided. This is often the cleanest option, since it removes the debt entirely.
If one spouse keeps the family home, the mortgage is often refinanced in that spouse's name alone, removing the other from the loan. This depends on the keeping spouse qualifying on their own income, which is a practical limit worth checking early.
For credit cards and lines of credit, a balance can sometimes be transferred to an account in one spouse's name, with the joint account closed. This requires the lender's cooperation and the receiving spouse's ability to qualify.
Where a debt can't be paid off or refinanced right away, spouses sometimes agree that one will keep paying it, backed by an indemnity clause. An indemnity gives the other spouse the right to recover from the paying spouse if the creditor comes after them because of missed payments.
Debts incurred after the separation date are generally treated differently from debts taken on during the relationship, particularly if they weren't for a family purpose. Establishing a clear separation date and being able to show what a debt was used for matters when a spouse disputes whether a debt should be shared.
Where one spouse owns a business, debts connected to it, especially ones backed by a personal guarantee, add complexity. A personal guarantee can leave a spouse personally liable for a business debt, which then needs to be accounted for in the overall property division alongside the business's value.
| Type of Debt | Common Approach |
| Mortgage | Paid off from sale proceeds, or refinanced in one spouse's name |
| Joint credit card or line of credit | Balance transferred, paid off, or accounts closed and frozen |
| Business debt with a personal guarantee | Accounted for in the property division alongside the business's value |
| Tax debt | Addressed in the settlement, with the CRA still able to collect from the named taxpayer |
| Debt taken on after separation | Generally the responsibility of the spouse who took it on |
THEBIL Family Law identifies every joint debt at the outset, works through how each one should be handled, and builds protections like indemnity clauses into the final agreement so a debt assigned to one spouse doesn't become the other's problem later. A divorce lawyer in Calgary who treats debt with the same care as assets helps avoid unpleasant surprises after the divorce is final.
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They're considered alongside assets in property division and can be assigned to one or both spouses, but that assignment doesn't bind creditors, who can still pursue either spouse on a joint debt.
Yes, if your name is still on the account. A divorce settlement doesn't change what appears on your credit report or what the lender can collect from you.
It depends on whether the debt was joint, whether it was for a family purpose, and when it was incurred. Debts incurred after separation are generally treated differently from those taken on during the relationship.
A provision in a separation agreement that lets one spouse recover from the other if a creditor pursues them for a debt the other agreed to pay.
Usually through refinancing in your former spouse's name alone or through the sale of the property, which requires the lender's involvement.
Generally yes, or at least freeze them, since new charges on a joint account can create shared liability even after the relationship has ended.
They're accounted for in the property division, and personal guarantees can leave a spouse personally liable regardless of who runs the business.
Yes. THEBIL Family Law identifies all joint debts, works out how each should be handled, and includes protections in the agreement to reduce risk after the divorce.
Debt is part of your divorce whether or not it gets the same attention as assets. THEBIL Family Law can help you sort out what you owe, who's responsible, and how to protect yourself afterward. Book a consultation to talk through your situation.
