George Simons | December 02, 2022
Summary: Does your husband have a lot of debt? Worried that you'll be on the hook? Find out if you're responsible for your husband's debts.
You won't be held liable for your husband's debts after divorce except for a few known instances. However, if you're in the middle of a divorce, or you just got one, there's a lot you need to know about handling debts you incurred individually or as a couple.
This article discusses everything, from basic regulations to complex situations you need to know about debts after divorce.
Different states consider two sets of rules regarding the responsibility of debt during marriage and after divorce. Most states use the common law property rules, while a good number practice the community property law.
In states that use the common law rules, couples are responsible for debts that bear their names and those taken to benefit the marriage.
For example, the couple is responsible for a joint credit card debt even if one of the spouses was only a consigner. They are also responsible for debts incurred to improve a joint property such as the couple's home.
However, if either of the spouses incurred any personal debts, such as a personal car debt, they'll be solely responsible for it. Therefore, in case of a divorce, each spouse will be liable for their personal debts and jointly responsible for the debts they incurred as a couple.
As for property separation, only marital property will be shared equitably among the spouses, but they will keep their individually acquired properties.
In the community property rule, any assets acquired or debts incurred by either spouse during the marriage are jointly owned or "community-owned." Therefore, in a divorce or a legal separation, the debt is divided among the ex-couple.
Only a handful of states apply the common property rule, including Arizona, Idaho, California. New Mexico, Nevada, Texas, Wisconsin, Washington, and Alaska (as an option). To avoid being liable for the financial decisions of their partners in these states, spouses can sign a prenuptial agreement to keep their personal properties, incomes, and debts separate.
Since both assets and debt are jointly owned by the couple in a community property state, creditors can seize either of the spouse's assets when trying to recover their debt if one spouse is insolvent.
Similarly, if one spouse files for bankruptcy, their debts and those belonging to the other spouse will be discharged.
However, community property rules also exclude some assets and income from community ownership. For example, a gift or inheritance to one spouse is solely theirs and can't be shared with the other spouse during a divorce. Such property also can't be seized by creditors if the other spouse is insolvent.
A divorce ruling considers several factors when dividing assets and debts among the divorcees. They include:
The general goal of a divorce ruling is to have an equitable and fair separation, and thus, the court indicates the responsibilities of each spouse regarding the debt after the divorce.
However, creditors aren't always bound by the divorce judgment regarding the responsibility of debt. This is because divorce decrees don't alter the agreements between the creditors and the spouses. So if the debts are unpaid, creditors may still pursue the spouse that owes them or both spouses if the debt was a joint liability.
In some cases, the court may decide that one of the spouses will be responsible for a joint debt such as a shared credit card, depending on different circumstances of the case. However, the spouse responsible for the debt may fail to honor the repayment agreement, forcing creditors to go after both spouses during debt collection.
If you find yourself in a similar situation, you may petition the court to enforce the divorce decree to hold your ex-spouse responsible for the debt owed. Otherwise, you may have to pay off the debt to avoid ruining your credit report.
The responsibility of debt after divorce mostly depends on the property laws of the state you live in. Therefore, if you ever get sued by a creditor for debt belonging to your ex-spouse, it's always advisable to respond promptly.
Ignoring the lawsuit won't cancel the debt. On the contrary, the situation could become worse if the court passes a default judgment against you.
Understandably, you may not know how to file a legally acceptable answer to your debt collection lawsuit. That's where SoloSuit comes in to help you create an attorney-approved answer within minutes. A copy of the answer document is then sent to the court, and another is delivered to the plaintiff.
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
Here's a list of guides for other states.
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Need help managing your finances? Check out these resources.