Spousal Support, Under-employment and Consumer Proposals

Spousal Support, Under-employment and Consumer Proposals

In Canada the Bankruptcy and Insolvency Act (BIA) stipulates under which situations an indebted person can make a consumer proposal or file for bankruptcy. The Office of the Superintendent of Bankruptcy (OSB) issues guidelines with respect to minimum standards of living and so forth, but information can also be obtained from other legal areas. One of these legal areas is spousal support. If a spouse is not actively searching for job or working to full capacity the courts may suspect that he or she is purposely under-employed and if that is the case the courts may increase the required spousal support payments. One case that deals with under-employment is Gustafson v. Gustafson (Spouses). The Spouses were both 56 and had been married for 34 years. They had three grown up children. Their marriage had essentially been a traditional one in the sense that the wife had spent much time at home with the children. Both of them had not finished high school at the time they got married. However, the husband had worked hard and eventually obtained an Aircraft Maintenance Engineer Certificate. After 25 years for the company he achieved a salary of CAD 50,000. After the Spouses’ youngest child started school the wife also started working as a cashier. In 1997 they bought their first house in Quebec. In 2003, the husband was approached by a former co-worker and offered a contract to upgrade airplanes in Venezuela. In this position, the husband would more than double his salary. The Spouses discussed the matter and together decided that he should take the job and the husband consequently quit his employment. As events unfolded, the job in South America lasted only 14 months and the husband returned to Quebec in 2004. At this time they had app CAD 85,000 at the bank and decided to renovate the house. Unfortunately, the husband started to develop health problems and this contributed to their increasing debt problems. Eventually the Spouses decided to contact a Licensed Insolvency Trustee to get help with their financial situation. Both parties then filed for consumer proposals. The house had to be sold and the Spouses were essentially left with nothing. They had to move in with one of their children and the wife decided to separate in 2007. At the court hearing to decide the amount of spousal support payment, the wife argued that had not tried enough to find a better paid job that matched his qualifications and experience. The court concluded that the husband’s efforts to finds new employment had indeed been poor. However, it further found that the Spouses were together for much time the husband had decided to live of the monies made in South America. The court concluded that since the Spouses separation the major contributing factor to the husband’s lack of employment had been his deteriorating health. Accordingly, the court found that the husband was not under-employed. For more information on consumer proposal of financial advice, contact a Licensed Insolvency Trustee.