Debt and Marriage: Am I Responsible for My Spouse’s Debt?
10 MIN READ
Published September 17, 2023 | Updated September 18, 2023
Marriage joins a couple’s finances, and when one spouse starts accumulating a lot of debt, it can put a lot of pressure on both. The main factor that will determine whether you are responsible for paying your spouse’s debt is whether you live in a common law or a community law state. Further, it’s also important to learn more about what creditors can do and what you can do to protect yourself.
Am I Legally Responsible for My Partner’s Debt?
If your spouse has accumulated a lot of debt over the years, it’s natural to wonder, “Who is responsible for my spouse’s debt.” Fortunately, in most cases, you won’t be responsible for the debt your spouse owes. But if you live in a community property state and have accumulated debt during the marriage, you may be on the hook to repay it. Let’s take a deeper look into spousal responsibility for different types of debts.
Credit Card Debt
In most common law states, you’ll not be responsible for your spouse’s credit card debt. Even if you are an authorized user, the credit card will still be in your spouse’s name, so you will not be responsible for any debt on that card. In states where community property law applies, both parties will be equally responsible because credit cards are community property in marriage.
Another question many people have is, “Am I responsible for my spouse’s debt in a joint credit card account?” In the case of a joint credit card, both will be responsible for credit card debt, regardless of who used or made payments on the card. If you want to remove your name from the card, you’ll first need to close the account, either by paying off the balance or transferring the balance to another card.
Medical debt is a complex area, and the rules differ in each state. Healthcare costs can be the largest source of debt for many families as costs continue to rise. Depending on your situation and place of residence, you may have to pay some or all of your spouse’s medical debts.
In community property states, medical bills incurred during the marriage are equally divided between spouses. In other states, it can be given priority for claims against any jointly owned property. The doctrine of necessaries states that a person is responsible for any costs incurred for the wellbeing of spouse and children. This is another reason why you may be responsible for your spouse’s medical debt.
If your spouse dies, states can recover Medicaid costs from the estate after they pass away. If you are a surviving spouse, the state will not make a claim during their lifetime, but it can claim repayment after you pass away. Some states can make claims even against non-probate assets or place a lien on the recipient while they are alive. If your spouse has significant medical debt, it’s best to seek legal advice to explore your options.
Student Loan Debt
Usually, you’re not responsible for your spouse’s student loans. Only the person who signed the promissory note for private and federal student loans is legally obligated to pay it back. But, you may become responsible for repaying these loans in a few scenarios:
- You live in a community property state.
- You combine your student loan with a spousal consolidation student loan.
- You are a cosigner on the loan.
If you live in a community property state, you’ll be responsible for student loans your spouse borrows during your marriage. You will also be liable for the debt if you refinance or cosign your spouse’s student loans. Make sure you know the consequences and your rights before you do any of these things.
In the case of secured debt, such as an auto loan, the person who owns the loan is responsible for repaying it. If you are a co-signer on the loan, you’ll be equally responsible for the debt, regardless of who uses the car. If your spouse doesn’t have a good credit score and you co-signed on the car loan, you’ll still be on the hook to pay the loan.
In the case of a joint mortgage debt, both partners will be equally responsible for it after marriage. Another thing to be aware of is that the mortgage and the title of the house are two separate things. For example, if your name is on the property’s title as a co-owner, but you’re not a co-signer for the mortgage, you may not be responsible for the debt if you live in a common law state.
If you live in a community property state, you will be financially responsible for mortgage debt, whether you are on the loan or not.
Debt Liability: Common Law States vs Community Law States
Every state has its own regulations about spousal property and debt and how they should be divided in case of a divorce. When determining spouse debt accountability, it’s crucial to know whether you live in a common law property state or a community law property state.
Common Law States
Common law property states or separate property states recognize financial independence in a marriage. When both partners have separate incomes, they may choose to combine their assets or keep them separate. In these states, the person who borrowed the loan is responsible for paying the debt.
One exception is if you have a joint account or acted as a co-signer on the debt. Co-signers are equally responsible for the debt, regardless of whether they benefited from the money borrowed. Most states, except the community law states listed below, are common law states. Some states also allow you to opt into common law during divorce.
Community Law States
In community law states or community partner states, married couples are recognized as one entity instead of separate people. This encourages equitable distribution of the assets, where both partners get their fair share of assets acquired during the marriage. That also means that any debt acquired during the marriage will be the responsibility of both spouses.
Currently, there are nine community property states:
- New Mexico
California, Nevada, and Washington extend community property law to domestic partnerships. Florida, South Dakota, Kentucky, Tennessee, and Alaska allow couples to choose the method of property division.
Protect Your Assets with Prenuptials and Estate Planning
Not discussing money and financial expectations can lead to problems for many couples. If you have any assets that you are bringing into a marriage, a prenuptial agreement can help shield them during divorce proceedings. Prenups are legal agreements that couples can enter into before marriage. The arrangement can outline the division of assets and debts in the event of separation or divorce. It allows both partners to protect their assets fairly.
Estate planning is equally important because it allows you to organize your assets and specify how they should be distributed when you pass away. Estate planning involves creating legal documents such as healthcare derivatives, powers of attorney, revocable trusts, and wills to protect your loved ones, minimize taxes, and have more control over your assets. Financial transparency and open communication are crucial to ensure that there is clarity on money-related matters before you enter into a relationship.
How to Handle Debt in Divorce and Death
If you are dealing with a spouse’s death, finding out that their estate may have to pay their debts or that you may be responsible for their debt can come as a shock. If you’re wondering, “Am I responsible for my deceased spouse’s debt?” you’re not alone. A lot of couples do not have a financial plan in place that incorporates debt repayment measures.
The best way to handle debt in divorce and death is by having a financial plan in place through a prenuptial agreement and estate planning. Your financial plan may specify which debts you’ll be responsible for jointly and individually. It can also be helpful to create a list of all your debts, including the amount you owe, the creditor, and who is responsible for the debt.
You can also put contingencies in place for paying off those debts in case of the death of one spouse. For example, a life insurance policy can help the surviving spouse cover funeral expenses and pay off debts. Individual retirement accounts and 401(k)s are usually insulated against debt collection, so it may be helpful to name your spouse as a beneficiary on those accounts to offer some asset protection.
Options for Spousal Debt Relief and Consolidation
The best way to ensure that debt doesn’t become a problem in case of a divorce or the death of a spouse is to pay it off. Exploring spouse debt responsibility is an effective way to ensure that you are taking steps as a couple to split obligations so you can tackle debts faster. There are several debt relief options to consider. For example, if you have any joint credit cards, consider a credit card balance transfer to have the debt separately from your spouse. If you have multiple debts, debt consolidation can help make repayment easier while reducing interest charges.
Another option is to enroll your debt into a debt settlement program. If the debt is jointly owned, both will need to enroll in the program. With debt settlement, you may be able to save as much as 50% of the enrolled debt before fees by negotiating with the lender to settle your account for less than you owe.
You can also get in touch with a credit counseling agency and enroll in a joint debt management program. The idea is to eliminate the debt both parties owe if you are willing to take responsibility and stick to the plan. If none of these options work, or if the debt is overwhelming, bankruptcy is a last resort option. It’s best to consult with a bankruptcy attorney to determine how filing for bankruptcy can affect you and your spouse.
The Bottom Line on Spousal Debt Responsibility
Usually, you’re not responsible for your spouse’s debt unless it’s a joint account or you are a co-signer. But it's important to remember that state laws can vary. Divorce or your spouse’s death may impact your responsibility for marital debt. If you are concerned about your spouse’s debt, it’s a good idea to communicate openly and encourage them to pay it off so as to keep your own and your joint accounts in good standing.