Tuesday, March 13, 2012

Can Creditors Make You Pay Your Spouse's Debt?

Usually, creditors cannot actually make anyone pay a debt until they file a lawsuit and win a judgment against the debtor. In the vast majority of states, even in this scenario you cannot be legally compelled to pay your spouse's debts. Certain states have community property laws that entangle your spouse's financial situation with your own, including debts, in which case you may share legal responsibility. In all states you have legal responsibility for any jointly-held assets and liabilities.

Joint Debt

    Most states operate under the principal of marital assets, meaning the spouses each have their own assets and are responsible for their own debts. If you agree to joint responsibility with your spouse for a debt, such as a credit card or a home mortgage, then you are both liable for the debt's repayment. Whether or not you actually participate in the repayment of the debt, creditors can come after you for your spouse's debt in this situation.

Community Property Debt

    If you and your spouse live in one of the nine community property states, you are both liable for debt that either has incurred after marriage. Even if your spouse opens and uses a credit card solely under an individual name, you are legally responsible for that debt as well. If your spouse cannot pay that debt, you have an equal responsibility to satisfy it. States with community property laws are California, Nevada, Arizona, Louisiana, Texas, New Mexico, Washington, Idaho and Wisconsin.

Joint Assets

    While creditors may not have the right to make you pay your spouse's debts, you may have to surrender some assets to help satisfy those accounts, particularly in a community property state. Community property laws stipulate that assets acquired by a couple after marriage are jointly owned. Whether or not you are actually the one who is the primary user of the asset doesn't matter for legal purposes. If your spouse's creditors have a right to levy or take that property, you should be prepared to lose some assets that you might consider your own. The same is true if you live in a marital asset state but have agreed to joint ownership of certain property, such as a computer or a coin collection.

Spouse's Assets You Use

    Even if a creditor cannot legally take your property for your spouse's debts, the same effect may be achieved if you regularly use your spouse's assets. For example, if you are a one-car family and that car is registered in the name of your spouse, creditors may have the right to take that car from your family. Although the car is not legally your property, if you use it every day as your car you will certainly feel the effect of it missing if creditors take it.


Post a Comment