How does bankruptcy affect divorce equalization payments

Question received: I have an equalization payment owed to me. My spouse claims he will be filing bankruptcy and wants to pay the lump sum over 3 years.
Will my equalization owing be included in the bankruptcy?

Answer: Yes, if your ex-husband is obligated to make an equalization payment that has been ordered prior to him filing bankruptcy, then you become a creditor in the bankruptcy. The bankrupt husband’s assets are no longer accessible to enforce a claim for equalization, as the assets vest with the trustee. If he is able to obtain a discharge from bankruptcy, then the equalization payment is discharged with the other debts.

Equalization, support and maintenance payments are governed in Kitchener-Waterloo, Ontario, by the Family Law Act. We are only giving you a very general answer; there are many different situations and orders, so we strongly encourage you to confirm the details with your legal counsel.

The Bankruptcy and Insolvency Act does provided for special treatment of debts that are for family support and maintenance. More information can be found in an article our main site: Divorce and Bankruptcy Law in Canada