A common question people have is the extent to which they might be liable for debts incurred by their spouses. This concern is understandable, particularly when the debt is significant or the spouses are divorcing. The truth is, however, that the answer to the question depends on many things, including the state you live in and the circumstances under which the debt was incurred. However, there are a few general rules that can help you begin to understand spousal liability for debts of the other spouse.
The first significant issue is where you live. That is because most of the laws that govern the payment of debts are made by state legislatures.
Each of the state’s’ laws fall into one of two general categories of marital property and debt: community property or common law property. This is significant because community property states are much more likely to find that property or debt acquired during a marriage is “owned” by both spouses.
General Rules in Community Property States
There are nine community property states:
- New Mexico;
- Washington; and
In community property states, the general rule is that both spouses owe a debt that was acquired while they were married. This is true even when only one of the spouse’s names is placed on the title to property, such as a property deed or a car title. When a debt is considered marital, the creditor can pursue the assets of either spouse to satisfy the debt.
Debts incurred before the wedding date or after a couple separates are considered separate debt of that spouse. When a debt is considered separate, only property owned by that spouse can be pursued to satisfy the debt.
General Rules in Common Law Property States
Most of the states are considered common law property states. In these states, debts incurred by one spouse are generally that spouse’s sole debt, even when clearly incurred during the marriage. Most of the time, before the other spouse will be considered liable for a debt, that spouse must take some action that makes him or her responsible. Here are some examples of actions that can make both spouses responsible for what would otherwise be a separate debt of one spouse:
- co-signing or guaranteeing a loan; and
- becoming one of the owners of the property, such as by placing his or her name on a car title.
In addition, in some states, debts incurred to pay for the couple’s basic needs, such as food, clothing, or shelter, are considered debts of both of the spouses.
In common law states, the creditor who provides a loan to one spouse can generally only pursue that spouse’s property to satisfy the debt. However, there is a notable exception for debts incurred for a family’s basic needs.
Who may be held responsible for a debt incurred by one spouse is a very fact-sensitive question. This means that in most cases, the answer depends on the circumstances in which the debt was incurred. For this reason, if you are worried that you might be responsible for a debt incurred by your spouse without your knowledge, the safest course of action is to contact an attorney who is licensed in the state where you live.