Q: I am married. My spouse has run up large credit card debts and I am worried that I will be held responsible for his debts.
A: In Canada, one spouse is not automatically liable for the debts of the other.
The answer is rooted in the law of contract. Your cardholder agreement defines the deal between you (and/or your spouse) and the credit card company. It also depends on who used the card and whether spousal cards are issued. There are three main possibilities here.
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If your spouse had a credit card in his name alone and he ran up a large debt, you will not be liable for that debt unless you signed an acknowledgement, guarantee or some other agreement making you directly liable.
If he is the only person who signed the contract with the credit card company and the only person who used the card, then he is the only person on the hook for the money owed. Ask to see an agreement with your signature on it.
If your spouse has a credit card in his name but a spousal card was issued in your name, you may be liable for this depending on what the cardholder agreement says and whether you signed it and, in some instances, if you used it. If a spousal card is issued but you don’t sign the actual contract, you may still be liable if you use the card to make purchases, because you sign the card before using it and that signature and use represents an agreement to pay.
The agreement to pay covers the full balance owing, not just one spouse’s purchases. If you charged $50 to the card and your spouse charged $50,000, you are likely on the hook for the whole amount.
Some card companies issue a spousal card just for convenience and to encourage use of the card. Others actually make your spouse the applicant under the cardholder agreement and make you the joint applicant. In that case they may be able to go after you. If you are on the agreement, it probably says the credit card company can pursue either of you individually, or both of you.
If there is a joint credit card issued by a company or tied to a joint line of credit from your financial institution you are definitely liable, even if your spouse ran up the bills. You are supposed to be responsible and monitor the use of the card.
Some general principles and common sense rules apply. Always read what you sign before you sign it. If you don’t understand it, ask. Always keep a photocopy of what you sign.
Any creditor who is pursuing you or your spouse should be able to supply you with a copy of the written agreement you signed. If not, I sure wouldn’t be in a hurry to pay.
Most credit card companies build in the contractual right to terminate your use of the card, but still pursue you for the outstanding balance. You also have the right to terminate the card, but under most contracts that will trigger the immediate full balance being due and payable.
If you are on a joint card with your spouse, you may be able to pay a set amount and get your name removed from the card. However, if you do this you need the credit card company to acknowledge in writing that it agrees to this.
Also, if your spouse is having trouble with his or her credit, that should not reflect on your credit reports or reduce your credit rating, unless you are also jointly or directly liable for the card balance. It’s a good idea to check your own credit report if your spouse is in financial trouble to ensure that trouble is not tainting your credit history. Also, seek help and advice from a lawyer, accountant, debt counsellor or trustee in bankruptcy.
Rick Danyliuk is a practising lawyer in Saskatoon with McDougall Gauley LLP. He also has experience in teaching and writing about legal issues. His columns are intended as general advice only. Individuals are encouraged to seek other opinions and/or personal counsel when dealing with legal matters.
