Spouses and Debt: Who's Really on the Hook for Those Bills?

By Dan Rafter. Last updated 11 September 2015. 0 comments

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Your spouse has run up thousands of dollars in credit card debt that you didn't know about. If your partner can't pay back this debt, are you responsible? Can the financial institutions behind this debt come after you for their missing payments?

The answer depends on where you live, whose name is on the credit card agreement, and whether you acted as a co-signer on that card. But that's only the technical side of the question. When it comes to the practical side, the answer is easy: When your spouse racks up loads of credit-card debt, the odds are it's going to affect your life, too.

The Legalities

Speaking in the strictly legal sense, though, the odds are high that your spouse's credit card debt is not technically your problem, as long as your name isn't on the credit cards that your partner used to rack up this debt. However, if your spouse ran up debt on credit cards that are in both of your names, you are just as responsible for paying off that debt. The same holds true if you are co-signer on any of the debt-ridden credit card accounts.

Common Law States

The other factor that matters is the state that you call home. The vast majority of states — all but nine of them — are considered common law states. In common law states, you are only responsible for credit card debt that is in your name. If the credit cards are only in your spouse's name, you are technically not responsible for the debt on them.

This doesn't mean that your spouse's credit card debt won't eventually hurt you. Say you and your spouse own a home together, with the title of the home in both of your names. The credit card company, if it is never paid, could force the sale of your home so that your spouse would have the funds needed to pay off the debt.

Your spouse's credit card debt could also make it more difficult for you to apply for auto or home loans, if you want to apply jointly with your spouse. When applying for a mortgage loan, for instance, lenders will consider only the lowest middle credit score between you and your spouse. You and your spouse each have three credit scores — maintained by the credit bureaus Experian, Equifax, and TransUnion. If your scores are 740, 770, and 730, but your spouse's are 620, 630, and 640, lenders will base their lending decisions only on your spouse's middle score, 630.

Lenders, then, will toss out your higher score. This means that if your spouse's score is too low, lenders might not approve you for a loan. If they do, they'll charge you a higher interest rate, making your monthly payment a higher one.

Community Property States

In community property states, you are responsible for your spouse's credit card debt legally. Debts that your spouse rack up during your marriage are considered community debts. This means that you and your spouse might both liable for it. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

However, the law isn't so simple in community property states. Extenuating circumstances might mean that even if you live in one of the nine community property states, you're still not responsible for your spouse's credit card debt. If the debt that your spouse racked up was for purchases that benefitted both you and your partner, the odds are high that you, too, will be responsible for it. If the credit card debts only benefitted your partner, it is more likely that only your spouse will be held responsible for them.

Community property rules also only matter for debts that your spouse has incurred during your marriage. You are not responsible for debts that your spouse has generated before or, in the case of divorce, after your marriage.

Spousal credit card debt can be a touchy subject. Make sure you understand the laws in your state, in order to stave off unnecessary headaches.

Has your partner ever run up massive debt? How did you deal with it?

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