Am I Liable for My Spouse’s Debt?

by Mar 6, 2022Blog

When it comes to deciding who is responsible for the debt in a marriage, it depends on your state laws. Each state has varying laws on debt and divorce, but generally speaking, states fall into two categories: community property or equitable distribution.

Nine states have community property laws: California, Arizona, Nevada, Louisiana, Idaho, New Mexico, Washington, Texas, and Wisconsin.

In this article, we’ll be exploring divorce and debt in the state of California.

What does community property mean?

Community property refers to joint ownership between a married couple. It encompasses all assets purchased or acquired during the marriage, including assets like real estate, cars, furnishings, and other valuable items. In the event of a divorce, assets are distributed between the couple equally.

Does community property include debt?

If you live in an equitable distribution state, debts incurred by one spouse are usually their responsibility alone. But if you live in a community property state, both spouses may share debts.

There are some exceptions to how much a spouse is obligated to pay off the other spouse’s debt. For example, if a spouse incurs debt before entering into the marriage, the other spouse is not obligated to help pay it off.

Spouses are also not responsible for the other spouse’s debt after the date of separation. However, a date of separation may not be enough to prevent paying off the other spouse’s debt.

One scenario is if an individual took out a loan to pay for family necessities. Their spouse may then be held responsible for helping to pay off that loan.

Could your separate property be used to pay off the other spouse’s debt?

In some cases, you may have your own separate property that is not designated as community property shared with your spouse. But is it possible for creditors to come after your separate property to pay off debt?

Separate property is generally safe in this scenario unless the other spouse went into debt for necessities like food or shelter. Then it may be possible for creditors to come after your separate property.

Dividing debt between spouses is a complicated area of law, so it’s crucial to have a law attorney on your side. You may also need to consult a financial counselor to establish a debt management plan and restore your credit.

Contact an experienced financial counselor

Divorce is a stressful experience, and navigating debt incurred during the relationship makes it feel even more overwhelming. You don’t have to manage your finances alone. Improve Credit offers a variety of services to fix your credit and obtain financial peace.

You may want to begin with our financial counseling services. Our experienced team will evaluate your current financial situation and create a personalized plan to get your finances back on track. This may include consumer credit repair and credit monitoring services.

At Improve Credit, our team is dedicated to helping you pay off debt, raise your credit score, and achieve your financial goals. Start by scheduling a free analysis of your situation, and we’ll take it from there.