When you divorce your spouse, are you still married to his or her debt? Most couples hold a variety of debts, from mortgages and car loans to credit card bills. Though a marriage may end, the debt lives on. The question is, who is responsible for it? It depends.
Community Property States
Let’s use an example to explain: After Bob and Jill got married, Bob made some poor investments. He racked up $50,000 in debt. A few years later, Jill files for divorce. Is Jill partly responsible for that debt? It depends on which state she and Bob live in. The following states are community property states:
- New Mexico.
In the states listed above, debts incurred during the marriage become “community” property. That is, they are owned by both spouses. This is true even if only one spouse signs the loan or debt agreements.
So, if Bob and Jill live in one of these states, Jill finds herself saddled with Bob’s debt. If Bob loses his job, for example, and cannot pay, Jill’s wages can be garnished. Creditors can go after assets gained during the marriage – cars, boats, vacation homes, etc.- even if they are solely in Jill’s name.
What about debt incurred before the marriage? Say Jill accrued $60,000 in student debt while she was single. This is her debt, and Bob is not legally required to repay them – unless he signed on to become a joint account holder.
In non-community property states, debts incurred by one spouse are owned by that spouse. Courts will divide those debts (often by balancing assets with debts: for instance, if one spouse receives a larger portion of property, he or she may be assigned a larger share of the debt). There are some exceptions: for example, if one spouse took a loan to fix the family home’s roof or the debt was incurred on a joint account. In these cases, the debt would be owned by both spouses.
If you live in a community property state, you can arrange a prenuptial or postnuptial agreement so your debts and incomes are treated separately. One other way to mitigate the risk of being responsible for your spouse’s debt is to sign agreements with individual lenders or suppliers: if they are willing, you can have them remove your spouse’s liability for your debt.
Remember, these are general rules. For example, even though Texas is a community property state, courts use a more nuanced process to divide debt responsibility. When considering divorce, consult with an attorney to determine if your spouse’s debt will become your responsibility and if there are any legal ways you can remove yourself from that burden.