Can You Sponsor Your Spouse If You File for Bankruptcy?

When you’re considering becoming someone’s sponsor, being in a debt relief program like bankruptcy can greatly impact the immigration process. Find out how the legal process can affect sponsoring a spouse to immigrate to Canada and what solutions can make your situation easier. 

Sponsorship & Bankruptcy

A common way to immigrate to Canada is through sponsorship. As a Canadian citizen or permanent resident, you can sponsor a non-citizen to help them become a permanent resident. A sponsorship will allow them to legally live, study and work in the country.   

Sponsorship is often a form of family reunification. It allows citizens who have immigrated to bring over their loved ones. You have the option to sponsor a spouse/partner, child, parent, grandparent and other relatives. It is important to note that there are certain qualifications that you must meet for sponsoring a spouse to Canada. One significant qualifier is that you cannot be in the midst of a personal bankruptcy.

How Does Bankruptcy Affect My Spouse in Canada?

Can you sponsor your spouse to immigrate to Canada if you’re bankrupt? If you’re bankrupt and have yet to be officially discharged, then no. Your application to sponsor a spouse will be rejected when you don’t meet this basic qualification. If you’re planning to file for personal bankruptcy or are currently going through the process, you should be aware of this eligibility issue.

Citizen & Immigration Rules in Canada

There are qualifications you will need to meet to sponsor your spouse. The Canadian government has several eligibility requirements for sponsoring a spouse or relative. Many of these requirements are there to confirm that you are capable of supporting your loved one financially so that they don’t require social assistance from the government. At a high level, they want proof that you can provide for this person’s basic needs. 

The reality of the situation is that you may not be able to cover another person’s basic financial needs while bankrupt. This is why most provinces (other than Quebec) list people as ineligible to sponsor a spouse when they’re bankrupt and have yet to be discharged.

Other factors that may make you ineligible include:

  • You are in default of child support/alimony
  • You received government financial help for reasons besides being disabled
  • You did not meet the terms of a past sponsorship agreement
  • You did not repay your immigration loan or had missed/late payments

The good news is that this problem is only temporary. Going bankrupt will not stop you from qualifying forever. Visit the Government of Canada website to identify other qualifications for sponsorship and to learn how to sponsor someone to come to Canada.

Your Options with Bankruptcy

How can I sponsor my spouse? You have several options when you’re planning on filing for bankruptcy and applying as a sponsor in the near future. 

Notify Your Trustee

If you’re hoping to file for bankruptcy, you should contact a Licensed Insolvency Trustee (LIT) right away and tell them your sponsorship plans. They will go over your finances to help you figure out your best course of action. They will let you know whether you should go through with the personal bankruptcy first, go through with the sponsorship first, or file for a consumer proposal. 

Manage Debts First

Consider sponsoring your spouse later. One of your options is to go through your debt recovery through bankruptcy first and then apply for sponsorship when you’re finished. You can be a sponsor once you’ve completed the process and received an official Discharge. 

You won’t have to wait too long, either. The typical time for a standard bankruptcy is 9 months. If you have surplus income, that process could be extended up to 21 months. 

It’s important to know that the process gets longer every time you file for bankruptcy. If it’s your second time filing, it could take 24 months to complete. If it’s your third, it could be 36 months. The more times that you file, the longer it takes to receive a full discharge. 

You need to wait until you have been fully discharged from the bankruptcy before you can fill out the sponsorship application. After that, you have the green light to start.

File for Bankruptcy After the Fact

If you are asking yourself, can I sponsor my spouse before bankruptcy? The short answer is yes, you can sponsor your spouse first. The reality, however, is that this option is a little trickier. 

For one, the timeline to complete your sponsorship could take longer than the average personal bankruptcy. According to the Government of Canada, it takes an average of 12 months to process a sponsorship application. You are also considered financially responsible for your spouse for 3 years after your application is approved. Unless you have surplus income, you will likely receive your discharge from bankruptcy after 9 months. You could put the process behind you in under a year. 

You might also be wondering “How does bankruptcy affect my spouse in Canada?” When you sponsor someone, you promise the government that you can cover their basic financial needs — along with your own. If you’re bankrupt, this can be difficult to accomplish.

Your Other Options

Sponsorship & Consumer Proposals

A consumer proposal is a legally binding agreement made between a debtor and their creditors. The agreement allows the debtor to pay a portion of their unsecured debts through a set payment plan, which will take a maximum of 5 years to complete. After that, the process will be officially over, and the debts to these creditors will be considered paid in full. 

Filing for a consumer proposal is often considered a strong alternative to filing for personal bankruptcy. A consumer proposal allows you to keep your assets, has no rules for surplus income, and it can affect your credit score for a shorter period of time. Most importantly, it will not affect your eligibility to file for an application to sponsor your spouse to immigrate to Canada.

So, can I sponsor my spouse? Yes. Consumer proposals do not interfere with immigration applications, so you could go through the debt recovery process and apply to sponsor your spouse at the same time. But what if you already declared that you’re bankrupt? It’s possible to annul your bankruptcy by filing for a successful consumer proposal. However, you will have to meet certain qualifications in order to file the proposal:

  • You must be at least 18 years of age
  • You must not owe more than $250,000 (excluding the mortgage on your primary residence)
  • You must be unable to reasonably repay these unsecured debts
  • You must be financially capable of completing the terms of the proposal
  • Your proposal must be accepted by the majority of the creditors involved

If you have more than $250,000 in unsecured debt (excluding the mortgage on your primary residence), you may be able to apply for a Division 1 Proposal. If not, then personal bankruptcy may be the only recovery option for you. Your Licensed Insolvency Trustee will let you know what choices are available.

How Does Spouse Sponsorship Affect a Consumer Proposal?

It’s important to remember that you are expected to financially support your spouse while you are sponsoring them. If you have filed for a consumer proposal, you will have to follow your monthly repayments at the same time. Juggling these responsibilities could be a challenge. 

You don’t want to underestimate the financial responsibility of going through a consumer proposal. First of all, a consumer proposal does not affect your secured debt and assets, which means that you will need to continue to deal with essentials like your mortgage and car insurance payments throughout the entire process. Adding on another financial responsibility can be stressful. You will have to be very careful with your budget. 

You also can’t risk missing your payments. If you miss 3 payments, the proposal will be automatically annulled. The protections of the proposal will end, and you will have to deal with your original amount of unsecured debt. If you think that you’re going to miss a payment, you should contact your trustee as soon as possible. They might suggest modifying the agreement to make your repayment more manageable. 

Sponsoring a spouse could put a strain on your financial situation. They might not have any income or savings to rely on. They will increase your costs of living. You need to consider how the change will affect your budget before you agree to file a consumer proposal. Talk to your trustee about your sponsorship and your payment concerns before signing the dotted line.

Filing for Bankruptcy or a Consumer Proposal in the GTA with David Sklar & Associates

If you are considering filing for personal bankruptcy or a consumer proposal, and you live in the Greater Toronto Area, you should contact David Sklar & Associates for help. Our licensed insolvency trustees have helped countless people address insolvency and put their financial issues behind them. Call us at 416-498-9200 to book a confidential and free consultation. We can help you figure out your next steps. 

Applying to sponsor your spouse for immigration will already be a tough process. You don’t want your financial issues to make it even tougher. Now you know how you can manage your financial recovery without sabotaging your sponsorship plans. 

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt and live in the Toronto area, call us at 416-498-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

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I cannot emphasize enough how thankful I am for Jackie Stanley's help with filing for bankruptcy.All of us dread being put in this position and we have a million questions about the process but trust me Jackie makes it so easy for you that you don't have to do anything yourself!She is very kind and friendly and puts you at ease right away. She emphasizes with you and let's you know it's not your fault.Most importantly when you leave that first meeting you will not believe the load that is taken off your shoulders. You can actually feel it!You are a godsend Jackie and I can't thank you enough!!I hope you are highly valued there as much as you are by me!
Sue Murray
18:45 05 Dec 21
Putting together and executing a Consumer Proposal can be daunting, that is unless you work with Cori Naron at David Sklar & Associates Inc. Cori's advice and support has been instrumental over the past five years. Thank you Cori!!
Barry Kuntz
20:37 01 Dec 21
I’m very happy with the services I received for Jackie Stanley who helped me get my finances in order. It was a quick and easy process & all of my questions were answered.
Amanda Frappier
01:18 19 Nov 21
I have had the privilege of being supported by Jackie at David Sklar Associate. She was very helpful, very professional and very friendly. She gave me the help I need. Thank you Jackie for your help.
Alex Taylor
22:03 17 Nov 21
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17:02 11 Nov 21
Jackie at Daivid Sklar and Associates is such a pleasure to work with. She explained everything in great detail and is always there when I have a question or concern. She really cares about her clients.
Steve Medica
09:33 10 Nov 21
I filed a proposal with another group, which came in as a referral from one of my brokers. My experience went from ok to bad to worse, due to lack of communication and education on the process I was to embark on. I worked with Cori Naron in the past, and I came to her now for help on literally doing the work that the other group should have done. Cori stepped in, educated me, advised on rights, responsibilities, how the process works and what potential outcomes may happen. I do not have enough words of recognition and gratitude for what she did - she alleviated stress, anxiety, dead-end thoughts and she made me live again. Congrats to DSklar for hiring her and retaining such talent.
Giani Kokolakis
18:45 25 Oct 21
Very professional service. Before contacting David Sklar & Associates i contacted bunch of other firms they seemed fishy. After I spoke with Jason Sklar at Hamilton Office I discovered professionalism with hope. I was explained every step of my situation with solution professionally. Thank you David Sklar & Associates.
Wajay Awan
07:29 12 Oct 21
I met David a few months ago and i am glad I did. He has helped me all the way through my bankruptcy with good advice and explained every step of the process. David is a very down to earth and very professional. Anytime I've had a question I was able to reach out to David by phone or email and he always got back to me. If your struggling with your bills and need a way to get help, I strongly recommend David Sklar &Associates to help you. My experience with them on 1-5scale would be a 5;; My life is so much better now, thanks to David Sklar.
Bruce Locke
16:13 08 Oct 21
I have had the privilege of being supported by Jackie S, at David Sklar n Associate.She was helpful, professional and friendly. I was able to get the help I needed at a difficult time in my life. I would recommend anyone who needs support with working out their debts to ask for Jackie, she will be waiting to assist however she can to help you through your debts. She works with a team who is always ready and responsive.Thank you Jackie and your team:)
Denise Simpson
15:17 09 Sep 21