Bankruptcy and Equity of Exoneration (ON)

Summary

This practice note discusses the equitable principle of exoneration, which states that where one joint owner of property charges the property for their sole benefit, the other owner may request that the full burden of the debt be set off solely against the principle debtor's half-interest in the property. In the family law context, the equity of exoneration may arise where the bankrupt spouse charges jointly owned property for their sole benefit and subsequently declares bankruptcy, leaving the creditor spouse with half the liability.