Featured News 2013 Addressing Marriage and Your Spouse’s Debt

Addressing Marriage and Your Spouse’s Debt

Marriage is the commitment of a lifetime, and while you understand that it means "for better or for worse," there are some cases in which spouses don't expect to take on the other person's debt as part of the agreement to wed. marriage and debt can be a complicating topic, and depending on the state you currently live will determine how the debt affects you and if you are liable or responsible for it. There are two different types of states in the country that discuss the issue of marital property: community property states or equitable division states.

Debt in the majority of the country (all but 10 states) is usually quite simple under the equitable division property states. Essentially it means that if the debt was accrued by one spouse individually, it will remain as such. Unless the debt was because of stuff used for the family, then in most cases it will stay under the name of whose debt it was; in this case your spouse's. The community property states include: California, Arizona, Idaho, Louisiana, Nevada, Texas, New Mexico, Wisconsin, and Washington; there are also some exceptions with Alaska; and their laws about debt are a little different.

When looking at community property states, it is first important to understand what this actually entails. Basically this term means that anything that is accrued during your marriage, when individually or as a couple, is considered to be marital property by the government. In the event there is a divorce, this property would then be divided as equally as the specific situation allows for. Due to the complexity of any divorce and property division, having the assistance of a family attorney is encouraged during your divorce process. Community property exemptions generally constitute of gifts and inheritances, or anything that was acquired prior to the marriage and then kept separate.

If your spouse specifically brought debt into your marriage while living in one of these 10 community property states, it is important to remember the phrase of "community." Any form of debt that was acquired during the season of your marriage is now considered to be your responsibility as well. It doesn't usually matter that your spouse bought a new sports car without your permission, if you are married the debt now is against both of your names. However it is also important to realize too, that if your debt was created prior to the marriage it continues to stay separate. For example, you and your spouse were married 5 years ago and they are on a 10 year repayment plan for their college loans; because these loans began before the wedding you are not responsible for what they owe. The most important factor here to remember though, is that if you and your spouse marry and then join your accounts together, then you too will be responsible for their college loans now.

In the event that you and your spouse are struggling with debt while living in a community property state, what can creditors take from you in order to pay off what you owe them? Because a community state connects you and your spouse's debt together, if a creditor is trying to acquire repayment, they could go after your assets as well in order to pay off the debt. If you are at all concerned with this factor of having to have your spouse's debt connect to your name, consider talking with a family attorney to discuss the different ways in which you and your spouse can keep your debt separate from one another. Perhaps you will consider signing a prenuptial or postnuptial agreement in order to lay the ground rules of what is to happen with your property and your debt in the event of a divorce down the road. Call an attorney today for more information!

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