When Am I Responsible For Spouse’s Credit Card Debts?
When two people pledge, “until death do us part,” they typically agree to share all the joys and sorrows of married life. Does that include your spouse’s credit card debts?
The question is important because, from the first day of their union, married couples in the United States carry a lot of debt. For example:
- Almost 75% of couples go into debt to pay for their wedding, according to a Student Loan Hero survey.
- Couples who are married carry more than double the amount of debt that single people do, says credit-reporting agency Experian.
- Credit card debt averages $6,881 for married couples, according to Experian.
Therefore, when it comes to “for better or for worse,” debt typically falls squarely in the latter category. Are you responsible for paying off your spouse’s share of those obligations?
The answer largely depends upon whether you live in a community property state or a common law state, says family law expert Kaiponanea Matsumura, a professor at the Sandra Day O’Connor College of Law at Arizona State University.
Community Property States
If you’re in a community property state, both income and debts acquired during the marriage are presumptively community property, Matsumura says.
In these states, debts accumulated by either spouse during the marriage are considered shared by the “community;” in this case, the spouses. That is true even if just one of the spouses signed the paperwork that led to the debt in question.
Thus, if your spouse rings up charges but doesn’t pay them off, you’re on the hook for helping to pay down the debt. “A spouse’s debt acquired during the marriage would be marital debt,” Matsumura says.
Just a handful of states meet this law definition. They include:
- New Mexico
Alaska is also a type of community property state in that the spouses sign a special agreement.
It’s important to note that in these states, spouses don’t share the responsibility for debts accumulated before the marriage. For example, if your beloved racked up tens of thousands of dollars in student loans during his early 20s, you typically aren’t obligated to pay off those debts.
However, if you sign on to become a joint account holder for the debt after your nuptials, you’re then responsible for the debt.
If you separate or accumulate divorce debt, this becomes the sole responsibility of the person who incurred the obligation.
However, some debts will remain the responsibility of both spouses. These include obligations classified as:
- Family necessities
- Jointly owned assets, such as a home repair
- From a joint account the couple held during the marriage
It’s important to note that the precise rules surrounding these laws vary from state to state.
In addition, although most people think of community property laws as affecting marriages, these laws can affect who’s responsible for debts in other situations. For example, in California, Nevada, and Washington, couples registered as domestic partners typically must follow these laws.
Common Law States
By contrast, in common law states, spouses share some debts, but not others. Most U.S. states are governed under this law.
In these states, spouses hold many types of property and debts in their name. For example, if you take out a car loan in your name, the debt generally is yours alone. That is also true for things such as business loans and credit card debts.
“Spouses are less likely to be liable for their spouse’s credit card debt provided the card is not in their name,” Matsumura says.
However, if the debt was incurred to pay for “necessaries,” meaning things that benefit the marriage, then most states will obligate one spouse to pay for those types of debts if the other spouse cannot, Matsumura says.
“Under both community property and common law regimes, it is more likely that you will be obligated to pay for necessary expenses like groceries, rent, basic clothing items,” he says.
Additionally, each spouse is responsible for any debt that the couple entered into together. For example, if both spouses signed a loan agreement, they each are responsible for the debt. If both names are on a home title, each spouse must pay down debts.
Are You Responsible for Your Deceased Spouse‘s Debts?
After losing a spouse, the last thing you want to worry about is paying off his or her debts.
Fortunately, in most cases, you’re not obligated to do so. However, there can be exceptions, depending upon the nature of the debt as well as where you live.
For example, if you cosigned a loan, you’re responsible for paying off the debt, even if the person has died. This is also true if you’re the joint holder of a credit card account.
In addition, some states may have laws that require you to pay specific debts of a spouse who has passed away. In some states, the executor or administrator of an estate may be required to pay an outstanding bill using property jointly owned by the surviving and deceased spouse.
In community property states, a surviving spouse may be obligated to pay some debts of a deceased spouse.
How to Avoid Being Responsible for a Spouse’s Debts
Money woes are one of the chief sources of conflict between spouses. A 2018 Harris Poll survey found that 36% of wedded couples and people in relationships cited money as the greatest source of stress in their union, making it the top choice among all couples.
Having to pay a spouse’s debt will likely only add fuel to the fire. Once again, the type of state you live in determines how easy it is to avoid having to pay your spouse’s debts.
If you live in a a state that has common law, the task of avoiding responsibility for a spouse’s debts is relatively simple. Keeping your finances separate is crucial to making sure you’re not on the hook for debts you didn’t incur.
“In common law states, you’re less likely to be responsible for your spouse’s debts if their credit cards and accounts are in their own names,” Matsumura says.
In community property states, it’s more difficult to avoid responsibility for many of the debts that occur during your marriage, regardless of who incurred them.
As in a common law state, you’ll be responsible for any debts that are in your name, as well as those for which you co-signed. However, you’ll likely also be legally bound to pay most debts incurred by either spouse during the marriage.
One way to avoid responsibility for a spouse’s debts in both common law and community property states is to enter into a prenuptial agreement specifying that the spouses are keeping their finances and property separate.
If you choose this route, though, make sure you live to the letter of the law.
“It is important that the spouses actually behave in accordance with the terms of the agreement by maintaining separate accounts and not commingling their finances,” Matsumura says.
Finally, in extreme cases, filing for bankruptcy can help eliminate your responsibility for paying a spouse’s debt. In community property states, if one spouse successfully files for Chapter 7 bankruptcy protection, it discharges all debts the couple holds in common.
In states with common law, the spouse filing for bankruptcy will have his or her debts discharged. The other spouse won’t receive the same protection without filing for bankruptcy separately.
At National Debt Relief, we take pride in empowering people to regain their financial stability through our proven debt relief program. Contact us and talk to a financial expert who will work with you to find the best option to settle your debt and help you achieve financial independence.
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