Can Your Spouse Make You Liable for Their Debts?

Legal Article

Can Your Spouse Make You Liable for Their Debts?

To determine whether your spouse can make you liable for their debts, you must first understand what type of property law your state follows. There are two types of property laws that states may follow: common law and community property.

Common Law States

Most states follow common law property rules. States that follow common law allow each spouse to be recognized as their own entity. This distinction means that each spouse may own property independently from the other. Thus, property owned by one spouse cannot be used to pay the debts of the other spouse without the property owner’s approval. A spouse can simply avoid liability by owning property or other assets under their own name.

A common example where one spouse may be held liable for the other’s debt relates to credit card debt. In a common law state, if a spouse has a credit card under their name only, you would not be liable for that debt. However, this outcome changes if you and your spouse have a joint credit card. Even if you and your spouse divorce, both parties will be liable for this debt until it is paid off.

Referring back to the credit card example, even if your spouse solely owns the account, credit card companies can come after portions of the property you jointly own with your spouse. This issue occurs in others instances of debt such as liability of doctors or contractors. To protect yourself and your family from potential lawsuits, it may be worth considering placing ownership of family assets in the name of your spouse to protect these assets from creditors.

Community Property States

The states that follow community property rules include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 

If a state uses community property, each spouse owns everything equally, no matter who purchased the asset or put money into the financial account. Basically, in community property states, spouses are view as one “economic unit” and cannot own property separately. Thus, any debts incurred by either spouse during the marriage are owed by the “economic unit.” It is important to note that this only applies to those debts incurred during the marriage. Debts incurred before or after marriage are not the other spouse’s issue.

In addition to property and assets being fully combined, income is also viewed as being earned by the “economic unit” not just one spouse. Thus, in community property states, creditors of one spouse can even go after the income of the other spouse to satisfy debts.

While the assets purchased and income earned during the marriage are considered joint property, gifts and inheritances received by one spouse remain separate property.

Contact Our DC Law Office for More Information

Finally, for more information regarding can your spouse make you liable for their debts, contact us at 202-803-5676. You can also directly schedule a consultation with one of our skilled attorneys. Additionally, for general information regarding real estate law, check out our blog.