Debts and Marriage – How Do the Laws Work for Spouses?

Isabella Rossellini

3.4k Reads

Updated: 7 Feb, 2023

Table of Contents

Know your state's rules Debt may be shared or separate; discuss how this affects you both and grow closer through trust and transparency.
Communicate about debts and needs Clarify which debts were for family essentials versus personal loans; this honors each other and builds safety, so you can choose together how to handle finances.
Create shared plans Consider prenups or agreed lenders to keep debts from breaking trust, and keep supporting each other as your bond deepens.

Your liability for the debts of your spouse depends on whether you live in a state that supports community property or equitable distribution.

Those states that have rules for community property, the debts that are owed by one spouse belongs to both the spouses. However, in the states where common laws are followed, the debts that are incurred by one spouse belongs to that spouse alone unless it was for the family’s need like tuition for the kids, food or shelter for the whole family.

The above is just some of the general rules with some states in the USA having subtle variations when it comes to the treatment of separate and joint debts. The same rules also apply to marriages of the same sex in states that support the above with the inclusion of same-sex domestic partnerships and civil unions equivalent to that of marriage.

Note the above is not applicable to states where the relationship does not confer the status of marriage.

Community property states and the laws pertaining to debts

In the USA, the community property states are Idaho, California, Arizona, Louisiana, New Mexico, Nevada, Wisconsin, Washington, and Texas.

Alaska gives married couples to sign an agreement to make their assets community property. However, a few agree to do so.

When it comes to debts, it understates that in case of share community property, the debts that are incurred by one spouse at the time of marriage are owed by the couple or the community even if one of the spouses has signed the paperwork for the debt.

Here, one such note that the debt taken by the spouse “during” the marriage substantiates the above as a joint debt. This means when you were a student, and you take a loan, this debt is yours and not jointly owned by your spouse.

However, if your spouse signs an agreement as a joint account holder for the above, there is an exception to the above law. There are some states in the USA like Texas that analyses who is the owner of the debt by evaluating who has incurred the debt for what purpose and when.

After a divorce or a legal separation, the debt is owed by the spouse who has incurred the debt unless it was taken for the necessities of the family or to maintain assets that have been owned jointly- for example a home or if both the spouses hold a joint account.

What about property and income?

What about property and income In those states that support community property, the income of the couple is shared too.

The income that is earned by the spouse during the marriage along with the property bought with the income is treated as community property with the husband and the wife being the joint owners.

The inheritances and the gifts that are received by a spouse along with separate property before the marriage is not community property if it is kept separate by the spouse.

All the property or the income that is acquired prior to or after the dissolution of marriage or separation of a permanent nature is regarded as separate.

Can property be taken for the payment of debts?

Joint property of the spouses can be taken for the payment of debts say professionals from esteemed debt settlement companies. One can take experts help to get an insight into the laws of community property when it comes to the payment of debts during permanent separation and divorce.

All the debts incurred during the marriage are considered to be joint debts of the spouses.

Creditors can claim the joint assets of the spouses under community property states irrespective of whose name is on the document. Again, couples in a community property state can sign an agreement to have their income and debt treated separately.

This agreement can be a pre or post-nuptial agreement. At the same time, an agreement can be signed with a specific lender, store or a supplier where the creditor will solely look into the separate property for the payment of a debt- this helps in removing the liability of the other spouse towards the debt with the agreement.

However, here the other spouse needs to agree to the above.

What about bankruptcy?

Under community property states, if one spouse filed for Chapter 7 bankruptcy, all of the community property debts of both the parties to the marriage will be wiped out or discharged. In states under community property, the debts that are incurred by a single spouse are the debts of that spouse alone.

The income that is earned by a single spouse does not become a jointly owned property automatically.

The debts are owed by both the spouses only if the debt incurred has benefits towards the marriage. For instance, debts taken for child care, food, clothing, shelter or items that are necessary for the household are considered to be joint debts.

Joint debts also include both the names of the spouses on the title to the property. The same applies even after the permanent separation of both the spouses before the divorce.

Property and income

In states that have the common law, the income that is earned by one spouse during the marriage belongs to that spouse only. It needs to be kept separate. Any property that is purchased with funds and income that is separate is also considered to be separate property unless the title of the property is in the name of both the spouses.

Besides the above, gifts and inheritance that are received by one spouse along with the property owned by a spouse before the marriage are considered to be the separate property of the spouse that owns it.

Note that if the income of one spouse is placed in a joint account, that property or income becomes joint property. If funds jointly owned by both the spouses are used for the purchase of assets, that asset becomes joint property.

These assets include vehicles, retirement plans, mutual funds, stocks, etc.

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