You are still liable for any debts incurred in your name after a divorce. That means that if you and your spouse used a joint credit card, you are both equally responsible for the debt. Beyond that, how credit card debt from your marriage is handled in divorce depends on a variety of things, including where you live.
The debt from a marriage is either deemed “community property” or “common law” property, depending on the state. In general, states that follow common law property laws hold the spouse who committed the obligations liable for the debt payments. Community property states, on the other hand, hold both spouses accountable for debts accumulated during the marriage.
In most states, common law applies, which implies that a court will hold you liable for:
- Even if the account isn’t jointly held, credit card debt from a cosigned account for your spouse can be a problem.
There are currently 41 common-law property states in the United States. You can choose to have your assets considered as communal property if you live in Alaska.
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are among the nine states that do things differently. Community property rules apply in these states, which means you and your spouse will be held equally liable for:
- Even if your name isn’t on the account or you’re not a cosigner, any credit card debt incurred by your spouse during the marriage.
There are exceptions to the regulations from time to time. Even if you aren’t technically liable for a credit card debt, the judge has the authority to allocate it to you during divorce proceedings. For example, depending on what the credit card was used for, you could be liable for a debt that was only in your spouse’s name. The same law applies to your spouse: if a judge assigns a debt to them in a legally valid divorce decree, they could be held liable for a debt that is entirely in your name.
However, this can become complex. A divorce order will not modify the terms of the debt contract, therefore the original account holder will continue to be responsible to the creditor. The credit card company may pursue you if your spouse refuses to pay the allotted obligation. Since the initial agreement was between you and the credit card issuer, the creditor has the right to pursue collection attempts. However, a divorce decree gives an ex-spouse the right to sue their former partner if they don’t pay a debt that was assigned to them.
Also, if you have a joint credit card, you will not be able to simply remove yourself from the account. Before you may close the account, you must either pay off the balance or continue to make minimum payments until the card is paid off.
Are you responsible for spouse’s debt in a divorce?
This fact sheet is provided solely for educational purposes. It is strongly advised that you seek legal guidance on your case.
Joni and her husband, Jim, were divorced. Jim’s business had been failing, and he had begun gambling on poker machines before the divorce. Joni and her two children continued to reside in the family house, and she had not heard from Jim in years, save from the occasional birthday card for the kids.
Joni had battled to keep up with the house loan obligations for the first few years after the divorce, but things were looking good today. Joni had never been concerned about obtaining a property settlement to bring their relationship to a close. Now Joni has gotten notice that Jim has declared bankruptcy and that his half of the house will be sold to pay off his obligations.
Financial difficulty is common once a relationship ends, especially if you are supporting children with little or no aid from your ex-partner or if you have joint obligations that your ex-partner is unwilling or unable to help you pay off.
Whether you are married or not, you are not accountable for your partner’s debts only because of your relationship. However, since you signed a loan contract as a joint borrower or guarantor, or because you were a director of a family firm or a business partner, you may have become accountable for his or her debts.
In most circumstances, you won’t be able to get out of previous loan agreements, but you should seek legal counsel on this. There are several services that may be able to help you. The box below offers a checklist of actions you may do to prevent your financial position from worsening.
Can I be liable for ex husbands debt?
Upon divorce, most assets obtained or built up during the marriage will be added to the’matrimonial pot,’ which will subsequently be shared evenly between both parties.
Of course, this is only true if a Prenuptial Agreement was not negotiated prior to the marriage.
Any debts accumulated during the marriage will have to be subtracted from the marital pot.
As a general rule, it makes no difference whether the debts were incurred by one spouse or both; any obligations accumulated throughout the marriage will simply diminish the aggregate amount of assets, which will then be shared.
What if debts exceed the level of assets?
If liabilities exceed total assets, the divorcing couple will need to come to an agreement on how to handle debt payments in the future.
If there is an exorbitant amount of debt, one or both parties may need to consider filing for personal bankruptcy. However, such a decision should not be made carelessly, since it may have far-reaching consequences.
Who is responsible for which debts?
Any obligations incurred in an individual’s name will technically be the responsibility of the spouse who took out the loan, etc.
The creditor will only hold them responsible for payment if they just have their own name on the loan agreement.
Combined obligations (such a joint mortgage) are difficult to divide after a divorce. The entire joint debt (including their previous partner’s share) will be borne by each former spouse.
Is spouse responsible for husband’s debts?
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are among the states that follow community property regulations. (Spouses in Alaska can sign a document making their assets community property, although few people do so.)
When Are You Responsible for Your Spouse’s Debt?
Even if only one spouse signed the papers for a debt, most obligations accumulated by either spouse during the marriage are payable by the “community” (the couple) in community property states. The trick is to keep this in mind during the marriage. So, if you have a debt while single, such as a school loan, it will not automatically become a joint liability once you marry. (There is an exception when a spouse joins an account as a joint account holder after they marry.) Some states, such as Texas, use a more complex approach to determining who owes what obligations by looking at who incurred the debt, for what reason, and when.
Unless the debt was incurred for family necessities, to preserve jointly owned assets (for example, to mend a leaking roof), or if the spouses maintained a joint account, a debt is normally owed only by the spouse who incurred the obligation after a legal separation or divorce.
How Are Income and Property Shared Between Spouses?
A couple’s income is also shared in community property states. All income produced by either spouse during the marriage, as well as property purchased with that income, is community property, and husband and wife own it equally. One spouse’s separate property includes gifts and inheritances obtained by one spouse, as well as separate property possessed before marriage and maintained separate (as long as that spouse keeps the gift or inheritance separate rather than, say, adding it to a joint bank account). All property and income obtained before or after a divorce or permanent separation is also considered separate.
What happens to debt when divorcing?
When people file for divorce, the first thing that comes to mind is usually their assets. Debts, on the other hand, are equally essential because they affect a couple’s net worth.
Examine each bill and financial statement that arrives at your door to gain a complete picture of your financial situation. Both spouses should have equal access to the family’s financial information and participate in major financial decisions.
The court will divide the couple’s debts and assets as part of the divorce decision. While dividing property and money, the court will specify which side is liable for paying particular bills.
The court usually seeks to allocate assets and debts evenly, but they can sometimes be used to balance each other out. A spouse who receives more property, for example, may be assigned higher debt.
It’s vital to note that state regulations on debt and asset division differ. Some states consider the assets and debts that each spouse brought to the marriage.
Everything in a marriage is owned equally in states where community property laws apply. Of course, one must keep in mind that a prenuptial agreement will have an impact on any settlement.
How are finances divided in a divorce?
Everything that spouses or domestic partners own collectively is referred to as community property. It covers anything you bought or received during your marriage or domestic relationship, including debt, that was not a gift or inheritance.
All profits generated by either spouse or partner (or both of you) during the marriage are considered community property, as is everything purchased with those earnings. By looking at the source of the funds used to purchase the land, you can typically tell if it belongs to the community. The property belongs to the community if the purchase money was acquired during the marriage.
For example, if you paid for a car with money you saved from your paycheck every month during your marriage/partnership, the car belongs to both you and your spouse or domestic partner. Because you earned the money during the marriage/partnership, the savings you have from your paycheck are community property.
All financial commitments (debts) accrued during your marriage or domestic partnership are considered community property. This is true even if just one of you was responsible for the debt, or if a credit card was solely in one spouse’s or partner’s name.
Each spouse or partner in California owns one-half of the community property. In addition, each spouse or partner is liable for half of the debt. The possessions and debts of the community are usually distributed equally.
It’s possible that you own more common property than you know. You might not realize that if your spouse or domestic partner has a pension plan, you have a right to a portion of the money in that plan if any of it was earned during your marriage or domestic relationship. You may possibly owe more money to the community than you know. You may not be aware that your spouse or partner has gone into debt in his or her own name. If the debt was accumulated while you were married or in a domestic partnership, it is also yours.
Quasi-community property is any sort of property acquired by one or both spouses or domestic partners while living in another state that would have been deemed community property if acquired while living in California.
In other words, if you or your spouse or partner lived outside of California during your marriage or partnership and earned money, purchased real estate, or acquired any other type of property that would be considered community property in California, that property is referred to as quasi-community property. It will also be considered as communal property in the event of a divorce or legal separation in California.
For example, suppose you and your spouse spent part of your marriage in New York, where you both worked and bought a car. You’ve relocated to California and are considering getting divorced or legally separated. The earnings from your separate occupations in New York, as well as the car, are quasi-community property since they would have been deemed community property if you had worked and purchased the car in California. As a result, wages and a car will be recognized as common property in a California divorce.
Separate Property
Anything you held before you got married or registered your domestic partnership is considered separate property. Even throughout the marriage or domestic partnership, inheritances and gifts to one spouse or domestic partner are separate property. Rents, earnings, and any other money you earn from your separate property are also yours. Separate property is also separate property if you buy it with separate property.
If you buy a car with money you inherited from a deceased relative, the car is yours even if you acquired it during your marriage or domestic partnership because it was purchased with your separate property.
Anything you acquire after the date of separation, including money you earn, is considered separate property. One of the reasons why the date of separation is so crucial is because of this. It can establish whether a piece of property or a debt belongs to the community or to the individual.
If you own separate property, it is solely yours as long as it is kept that way. Debts, like as credit cards obtained after the date of separation, might also be considered distinct property.
Always check the source of the funds utilized to purchase a product. You can then determine whether the object is separate or community property.
Mixed Community and Separate Property — Commingling
Things might be part separate property and part shared property at times. This is referred to as “Because the separate property and common property have become mixed together, the term “commingling” has been coined. It can be difficult to figure out how to split property that is a combination of separate and community property.
One common scenario is when one party owned a home before to the marriage or domestic partnership and then sold it and used the funds to purchase another home after the marriage or domestic partnership was registered. This new house’s down payment would be deemed distinct property (since the money came from selling a house that 1 person owned before the marriage or partnership). The equity (worth) gained from paying down the house loan is communal property if the mortgage payments on the new house are made during the marriage or relationship using either one of your earnings. As a result, the house’s equity has become commingled.
Another scenario is when you or your spouse/partner has a pension or retirement benefit from a job held prior to or during the marriage. Before the marriage or registered domestic partnership, you each made individual contributions to your pension. Contributions made after the date of marriage or domestic partnership registration and before you separated are considered community property. Those donations become separate property after you separate. The exact division of the pension is tricky, and you may need the assistance of a pension specialist to sort it out. If you both have a pension, you may be entitled to preserve your separate pensions in some cases. However, you must be certain of the worth of each pension.
In general, a lawyer’s assistance is required when either spouse or partner has a pension. First and foremost, a pension can be one of your most significant possessions from your marriage or domestic partnership. Second, the regulations governing pensions are quite technical and do not apply to any other type of asset. A pension plan must be well-designed “Before a judge can make a decision on how the pension will be distributed, you must “join” as a party in your divorce case. A qualified domestic relations order, or QDRO, is the name of the court order. If you make a mistake, the consequences could be disastrous. It is worthwhile to hire a lawyer to create the QDRO for you.
If you have a question regarding whether an asset is community, separate, or mixed property, you should see a lawyer. The same is true if you’re not sure how to pay off a debt. For assistance in locating a lawyer, go here.
Can I sue my ex for not paying bills?
Yes, you have the right to sue. The quality of your proof will determine whether you are successful. You’ll need cancelled checks and receipts for this. He will also be able to deduct any damages from whatever amounts he can show he contributed to other living expenditures, such as groceries or other utilities, assuming he paid for them. You should probably get legal advice to establish which court you should file a lawsuit in and whether your proof is sufficient. With the support of… you’d also have a better chance of reaching a negotiated solution.
Who is responsible for debt in a marriage?
When one or both parties enter the marriage with debt, the debt belongs to the person who incurred it. 1 For example, let’s say you owe $15,000 in private student loans. Your soon-to-be husband owes $10,000 on their credit cards.
Do I have to pay bills when I separate from my wife?
When it comes to household and utility bills, the individual whose name appears on the bill is legally responsible for paying it. It’s critical to agree on who will pay the bills once you’ve divorced. If you intend to stay in the family home, it may be prudent to have the bills moved to your name.
How can I not be responsible for my spouse’s debt?
Saying you’ve divided your finances isn’t enough; actions speak louder than words. A court may rule that you should share debts as well if you approach assets and accounts as if they’re shared. Separate bank accounts, automobile and other loans should be taken out in one person’s name exclusively, and property should be titled to one person or the other. This reduces your exposure to your spouse’s creditors, who can only seize assets that are wholly hers or her part of jointly owned property.
What assets Cannot be split in a divorce?
Premarital property, gifts, and inheritances are normally excluded from equitable distribution states. The court’s treatment of marital assets is the key feature that distinguishes community property jurisdictions from equitable distribution states.
Can I empty my bank account before divorce?
Many married couples find that having a joint bank account is the most convenient method to keep track of their finances. Regardless of how astonished you are (or aren’t) by the divorce, it’s critical to move quickly and wisely to protect your finances – even if you don’t believe your soon-to-be-ex is the vengeful sort.
You should be aware that if your ex emptys your joint accounts during the divorce, they will almost certainly regret it.
Our divorce attorneys in East Brunswick understand that money is a major concern for both parties during a divorce. However, if one person withdraws a large sum from joint money for whatever reason just before or during a divorce, the court will very certainly hold them responsible.
When two people share joint ownership of a bank account, they have equal access to the funds. Without the specific approval of the other, either party can make deposits or withdraw funds at any time. That means that, technically, either of them can empty the account at any time. However, if you do so right before or during a divorce, the contents of that account will almost likely be considered marital property. That means the divorce settlement will be based on an equitable allocation of assets. Even if one individual contributed significantly more to the account than the other, this is true.
According to a 2018 Bank of America survey, roughly 28% of millennials avoid joint bank accounts when they marry, preferring to keep their funds separate totally. If you have two working spouses who pay nearly the same amount to joint spending, this can help to prevent friction. However, you should be aware that this will not necessarily protect your assets from equitable split in the event of a divorce. Even if funds are held in different accounts, they are still considered marital property.
Assets that belong to both spouses are referred to as marital property. This could include funds in bank accounts, retirement funds, a shared home, or automobiles. Marital property is to be split evenly between spouses unless there are express instructions in a premarital or postmarital agreement.
Property obtained during a marriage is known as marital property. Separate property is commonly defined as property possessed separately before a marriage (think third-party gifts or inheritances).
The allocation of debts and assets does not have to be equal, as our New Jersey divorce lawyers can explain. It must, however, be equitable, as stated in N.J.S.A. 2A:34-23. 1. Equitable distribution takes into account:
- The economic circumstances of each partner at the time of partition (including income and earning capability);
- The requirement for a parent who has physical custody of a child to own/occupy the marital dwelling and/or use/own household effects.
Taking money out of a joint account and spending it or hiding it during a divorce deprives the court of the opportunity to assess all of this. There are frequently ramifications.
There will almost certainly be serious consequences if one spouse emptys a joint bank account – especially with the intentional goal of depriving the other spouse of it and/or in defiance of a judge’s instructions. The court is likely to penalize the act with fines or an order to pay the other side’s attorney expenses in addition to offsetting this amount in the remaining asset and debt split.
For example, if a wife withdraws $15,000 from a joint savings account a week before filing for divorce, her husband may be entitled to $15,000 in property that he would have received in the divorce if she had not removed those monies AND the court may order her to pay her ex’s legal bills.
- Require you to reimburse the missing funds through monthly alimony payments (or limit the amount of alimony you would have gotten otherwise);
- compel you to pay for some of your spouse’s expenses (lawyers, forensic accountants, investigators, expert witnesses, and so on);
That is why, if you have issues regarding when you can take funds from a joint account during a divorce, you should counsel with a divorce attorney.
