When separating, dividing assets is only half of the financial picture. You must also address debts and liabilities, including mortgages, credit cards, loans, and lines of credit.

Under the Family Law Act, debts are treated similarly to assets. They are generally considered shared family obligations, even if the debt is registered in only one person’s name.

The goal is to divide the net family property, meaning assets minus debts, so that each spouse leaves the relationship with an equal overall share, unless you agree otherwise.

Under the Family Law Act, family debt includes financial obligations that:

• Were incurred during the relationship, or
• Were incurred after separation to maintain family property

Family debt commonly includes:

• Mortgages on the family home or other real estate
• Lines of credit or personal loans
• Credit card balances
• Car loans
• Student loans
• Personal loans
• Tax debts
• Any other debts used for household or family purposes

It does not matter whose name is on the account. If the debt was taken on during the relationship or used for the benefit of the household, it is generally considered family debt.

Family debt usually includes debt that:

• Was incurred during the relationship, and
• Still exists at the date of separation

However, in some situations, debts incurred after separation can still qualify as family debt if they were used to maintain family property. For example:

• Paying the mortgage
• Paying property taxes
• Covering urgent repairs
• Maintaining insurance

The guiding principle under the Family Law Act is fairness. If the debt preserved an asset that will later be shared, it may also be shared.

Just like family property, family debt is generally divided equally between spouses under the Family Law Act, unless:

• You both agree to divide it differently, or
• A court finds that equal division would be significantly unfair

Debt is not usually divided by physically splitting each balance. Instead, debts are included in the overall property calculation. For example, if one spouse keeps the house and assumes the mortgage, that mortgage reduces the value of the house for equalization purposes. The overall goal is that each person receives half of the net family property.

Divii helps you balance assets and debts automatically in the Property Schedule so you can clearly see the net result.

A common misunderstanding is that if a debt is in one person’s name, it belongs only to that person.

Under the Family Law Act, that is not necessarily true. If the debt was incurred during the relationship or used for family purposes, it is typically treated as shared family debt, even if only one spouse signed for it.

However, there are rare exceptions. Some debts that were incurred for purely personal reasons and did not benefit the family may not be shared. Examples might include:

• Gambling losses; or
• Reckless or intentional financial misconduct

These situations can become legally complex and may require legal advice.

It is important to understand the difference between dividing debt in your Separation Agreement and your legal responsibility to the lender.

Even if your agreement says one spouse will take responsibility for a debt, the creditor may still pursue the person whose name is on the account.

For example:

• If a joint credit card is not closed, both parties remain liable to the credit card company.
• If a mortgage remains in both names, the lender can pursue either borrower.

A Separation Agreement allocates responsibility between spouses, but it does not change your contract with the lender unless the loan is refinanced or paid out.

This is why refinancing or closing joint accounts is often an important practical step after separation.

Debt division is just as important as asset division. Failing to properly account for liabilities can leave one spouse with more than their fair share of financial burden.

Under the Family Law Act, the goal is to divide net family property equally and fairly. That means carefully identifying all debts, understanding when they were incurred, and ensuring they are properly included in the overall calculation.

Because debt allocation can affect your credit, your legal exposure, and your financial future, it is always wise to seek independent legal advice before finalizing your Separation Agreement.

Clear planning today helps both spouses move forward with financial clarity and confidence.