Marriage and Debt Under the Law
There are two main systems in the U.S. that govern ownership of property in a marriage and liability for a spouse’s debts. If you live in a community property state, you probably will be responsible for debts accumulated by your spouse during the marriage. (These states are California, Texas, Arizona, New Mexico, Nevada, Washington, Idaho, Wisconsin, and Louisiana, while Alaska, South Dakota, and Tennessee make it optional.) On the other hand, if you do not live in a community property state, you probably are not liable for the debts accumulated by your spouse. There may be some exceptions if the debts are related to necessities of life for your family, such as food and clothing for your children.
These rules also apply to domestic partnerships and civil unions if the state views these statuses as equivalent to marriage. They do not apply if the state does not view domestic partnerships and civil unions as equivalent to marriage.
Community Property Rules
If a spouse incurs a debt before they get married, and then they get married before they have paid it off, only that spouse will be liable for the debt in most cases. By contrast, the couple will be jointly liable if a spouse signs the paperwork for a debt during the marriage, even if the other spouse was unaware of the debt. If the spouses get a legal separation or a divorce, the debt reverts to the spouse who incurred it, and the other spouse usually will not be liable for it. However, a debt related to jointly owned assets or a joint account may remain with both spouses, as may debts based on family necessities.
As a result, a creditor can pursue marital assets and income for a debt incurred by either spouse during the marriage. These include the assets and income of the spouse who did not incur the debt if the assets and income were acquired during the marriage. The death of the spouse who owes the debt does not remove the other spouse’s responsibility for it. On the other hand, a creditor cannot seek repayment from the separate assets and income of the spouse who did not incur the debt, such as gifts and inheritances or property acquired before the marriage.
In some cases, the spouses can agree through a prenuptial or postnuptial agreement to have their debts and income treated separately. Or they can reach a specific agreement with a potential creditor that only one spouse will be liable for a certain debt. If either spouse files for bankruptcy under Chapter 7, this will discharge all of the marital debts of both spouses.
Spousal Debts Outside Community Property States
If you do not live in a community property state, you are not accountable for a debt incurred by your spouse unless the debt arose from a joint purchase with your spouse or unless the debt benefited the marriage. Debts that are jointly undertaken may arise from a contract that both spouses sign or property for which each spouse has their name on the title. Debts that benefit the marriage often consist of expenses undertaken for children or to protect the family’s health and safety.
Thus, marital property generally will be shielded from creditors of only one spouse. If an account is held jointly by the spouses, a creditor usually will be limited to taking only half of the money in the account. There are a few states that give creditors greater access to marital property to pay the debts of one spouse. Creditors do not have access to the separate property of one spouse to pay a separate debt incurred by the other spouse. The same rules apply as in community property states regarding debts following a legal separation or a divorce.
