Am I Liable for my Husband's Debts?
As a general rule, you are liable for those debts you incur. If you and your spouse have a shared credit card in both of your names, you are both liable for the debts. If your spouse takes out credit cards or loans but you are not named in the credit or loan documents, you are generally not personally liable for this debt.
However, California is a community property state. In community property states, most property you acquire during marriage is owned by your "community," which is controlled by you and your spouse. Your community property is liable for debts accrued by you or your spouse during the marriage. This is true regardless of whether you or your spouse are personally responsible for the debts.
During marriage, these distinctions may make little difference. Much of the time, spouses work together to manage family finances and joint income is used to pay family debt. However, this question of who is liable for a specific debt becomes very important in the context of divorce or following the death of a spouse.
Liability Following Divorce
As part of a divorce settlement, assets and debts will be divided between you and your soon-to-be ex-husband, and community property will cease to exist. Once the assets are separated, creditors who have claims against your ex-husband alone cannot seek to obtain your property or make a claim against you to repay his debts.
If you have marital debts, these debts will be assigned to you or your ex-husband. This assignment however, is only effective between you and your ex-husband; it does not change the creditor's rights to seek repayment from you if you "signed on the dotted line" when the debt was incurred.
However, if your ex-husband fails to pay a debt that was assigned to him in the divorce and the creditor brings a lawsuit against you, you can bring your ex-husband into the lawsuit or seek an order from the divorce court. The terms of the divorce dictate that he is liable for this debt and, therefore, must indemnify you for any legal actions arising from non-payment of this debt.
It is important to note that this is true even if your husband files bankruptcy after a divorce. Under current bankruptcy laws, debts assigned in a divorce decree are non-dischargeable in bankruptcy. After your husband declares bankruptcy, a creditor can still pursue him for payment of these debts.
Realistically though, very few creditors will pursue someone who has filed a bankruptcy case and discharged debts, even when legally entitled to do so. If your ex-husband files bankruptcy, your joint creditors will probably come after you for payment. However, as with any other debts assigned to your ex-husband in divorce, he remains liable for these debts. If he refuses to pay, you can continue to encourage the creditor to pursue him and you may return to court to make the court enforce the terms of the divorce decree. To protect yourself, though, it is best to consult an attorney.
Liability Following The Death of a Spouse
Following the death of your spouse, creditors may contact you in an effort to collect debts incurred by your spouse while he was alive. Although they generally will not demand payment, they will likely provide subtle pressure to encourage you to make payments. While you may technically have personal liability, the creditor's options are limited.
Under California law, the creditor may try to collect its debt in one of two ways. If you probate the estate, creditors are notified and have the opportunity to make a claim for outstanding debts. The advantage to probate is that if all the property passes through probate, you have no personal liability except in very limited circumstances. The disadvantage is that you may lose assets to creditors in the probate process that you might otherwise be able to keep.
If you do not open probate, the creditor has one year from the date of death to file a lawsuit against you for repayment of your deceased spouse's debts. After one year, the creditor has no recourse unless you acknowledged liability for the debt in writing or the creditor timely filed a lawsuit against you. Even if a lawsuit is filed, your personal liability is limited to the fair market value of the property you received upon your spouse's death that is not protected from creditor claims under California law.
If you face this situation or are sued following the death of your spouse, you should contact a qualified attorney for assistance.
Ultimately, your personal liability for your spouse's debts will depend upon your individual circumstances. Details matter. For example, your responsibilities for debts acquired prior to marriage may be different than your responsibilities for debts acquired during marriage. Assets clearly gifted to a single spouse may be treated separately from assets acquired jointly.
To understand your obligations under California law and to ensure that you are protecting your interests, discuss your concerns with an attorney. A knowledgeable attorney can help evaluate your situation and determine your rights and responsibilities.
ABOUT THE AUTHOR: Weintraub & Selth, APC
At Weintraub & Selth, APC., we take pride in providing focused, inventive, and cost-effective legal representation for businesses and individuals in Southern California who are facing serious financial issues, such as bankruptcy, debt restructure, foreclosure, creditor and collections problems. We also represent individuals and businesses in commercial litigation such as breach of contract, defamation and fraud claims and business torts.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.