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Am I Responsible for My Spouse’s Debt?

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In a Nutshell

Whether you are liable for your spouse's debts depends on a few different factors. First, you need to know if you live in a common-law state or a community property state. Second, what kind of debt is it? Is it tax debt? Is it a debt secured by your property? Third, if it is a credit card debt, are you a joint owner of the account, or are you only an authorized user? With any debt, you will be liable if you are a joint owner of the account. As a general rule, an authorized user on a credit card will not be liable. All these factors matter.

Written by Attorney John Coble.  
Updated October 20, 2020


Whether you are liable for your spouse's debts depends on a few different factors. First, you need to know if you live in a common-law state or a community property state. Second, what kind of debt is it? Is it tax debt? Is it a debt secured by your property? Third, if it is a credit card debt, are you a joint owner of the account, or are you only an authorized user? With any debt, you will be liable if you are a joint owner of the account. As a general rule, an authorized user on a credit card will not be liable. All these factors matter.

Common-Law States

Forty-one of the fifty states are common-law states. Common law is the law that has handed down to the U.S. from England in the beginning and re-interpreted through generations of cases within the American court system. Community property is a deviation from the general consensus of the common law when it comes to marital property. Except for Louisiana, the community property states use common law as the other states in all areas of law except marital property.

Joint Debts

If you live in a common-law state, you are not responsible for your spouse's debts unless you have taken some step beyond marriage that binds you to the debt. For example, if you and your spouse open a joint credit card account or you cosign for a loan to buy a car, then it is not only your spouse's debt, it is your debt too. It doesn't matter what agreements you have between the two of you, if a creditor wants to get paid, they can collect or even sue either or both of you for the unpaid debt.

In the example above, if you later get a divorce and the divorce court judge orders your spouse to pay this debt, the creditor can still sue you if they don't pay the debt. In this situation, your only recourse is to sue your ex-spouse for your having to pay the debt. A divorce court doesn't have the authority to change your contractual obligations with creditors. The divorce court only has the power to order which spouse pays for what

Joint Assets

Consider what happens when the title for an asset such as a bank account or a car is in both your names and has equity in it. What happens if a creditor places a lien on this joint property? For this example, the lien is for a debt that is in your spouse's name only. You have not signed anything involved with this loan. If this creditor gets a judgment and places a lien on your home, it is still effective against your property even though you had nothing to do with the debt. It is possible that the creditor could seize your house and sell it at auction. In this case, the amount to pay the creditor would usually come out of your spouse's part and you would receive all proceeds for your half of the sale. In the case where spouses file separate tax returns, the same result can happen as in this example.

Community Property States

Nine American states are community property states. These states are Arizona, California, Idaho, Louisiana, Texas, Nevada, New Mexico, Washington, and Wisconsin. Community property laws require that any property acquired, debt accumulated, and income earned during the marriage is the property or debt of each spouse. This community debt includes the spouse's credit card debt. Whether the property is equally owned by each spouse depends on the particular state's law. The common law states require a contractual obligation to the creditor for the person to be responsible for their spouse's debts. In community property states, just being married is enough to be liable for any debt incurred for the family.

It's important to distinguish between debt and property acquired before and after the marriage. In community property states, pre-marriage obligations are not joint. There would be an exception if the non-debtor spouse signs a contract accepting liability for a pre-marriage debt. Gifts given by a person to their spouse, even in a community property state, are not community property. The gift is 100% owned by the spouse that received the gift. Moving from a common law state to a community property state and then getting a divorce could mean that debts accumulated since the marriage may now be both spouse's debts even if only one spouse has signed the contract with the creditor. Even moving from one community property state to another can make a big difference. Some community property states may split the debt 50/50 between the spouses. Other community property states will split the debt based on other considerations. For example, some community property states use the portion of the marital income each spouse earned to determine the percentage each spouse is liable for.

Cosigners Compared to Authorized Users

An authorized user has no obligation to pay on a credit card account. They are getting a free ride on your account. You may have an agreement with your spouse that they pay you for the charges they have made on your account. The credit card company still doesn't have a claim against the authorized user spouse since they're not a party to the spousal agreement. Many credit card companies will report all negative credit information related to the account on the authorized user’s credit report not only on the account owner’s credit. They will also harm the authorized user's credit score. Though most of the risk is on the owner of the account, the authorized user does have a risk to their credit report from being on the account.

In the community property states, even if a spouse is only an authorized user, any debts charged to the card after the date of marriage is a joint debt. In common law states, a co-signer or joint account holder has a different relationship with the creditor than an authorized user. If you are a co-signer or joint cardholder with a person in common law or community property states, you are liable for the debt.

Conclusion

If a divorce court orders your spouse to pay a joint debt, be aware that you are still liable for that debt if your ex-spouse doesn't pay. The order from the divorce court doesn't affect the rights of the creditor to collect from you.

If you do not think you owe for a spouse's debt, see a credit counselor or experienced bankruptcy attorney. These professionals can look at the facts of your case and determine if you're liable for the debt. Bankruptcy attorneys and nonprofit credit counselors provide free initial consultations. If you have a straightforward case, Upsolve has a free tool to help you file a Chapter 7 bankruptcy yourself.



Written By:

Attorney John Coble

LinkedIn

John Coble has practiced as both a CPA and an Attorney. John's legal specialties were tax law and bankruptcy law. Before starting his own firm, John worked for law offices, accounting firms, and one of America's largest banks. John handled almost 1,500 bankruptcy cases in the eig... read more about Attorney John Coble

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