A Note About Debt

I belong to an e-mail listserv with other solo practice attorneys throughout the country. A divorce attorney asked a question about bankruptcy and divorce. His client’s soon-to-be ex-wife had filed for bankruptcy without his knowledge and the attorney (having little or no experience in bankruptcy) posed a few questions to the board.

The economy has been falling apart before our very eyes, thus bankruptcy filings are naturally on the rise. While non recognition as a spouse or partner can be damaging financially and emotionally when it comes to obtaining support payments in family court, visiting a sick partner or inheriting from a dead one, it can be a blessing in disguise when discussing the “D” word: DEBT.

In many states, property purchased during a marriage is considered jointly owned by both spouses and debt incurred is likewise considered joint debt. This can be the case even if the debt is incurred by one spouse without the other’s knowledge.

If you remain legally unattached to your partner, you can avoid that unfortunate call from Mastercard…unless you specifically co-sign a debt for your partner (which you should never do), you won’t be on the hook!

So the next time you get grief at a cocktail party for being single, think about this: you will never be jointly responsible for anyone else’s debt.

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4 responses to “A Note About Debt

  1. Debt is a betrayl, and deficit a loss of trust. No matter if you are partnered or not, we’ve come to think that money = worth. I am not really relieved that I avoid being a possible victim by not being partnered. Because if I am or not, I am responsible for contributing more than I take away…

  2. Thanks for the comment. I know debt considerations may seem like a small thing, but I think that having total control over one’s finances is very important in life. One of the reasons that I have remained single is that I do not like the idea of being held responsible for the financial sins of another. And while it does not eliminate the risk completely, remaining single does give me some comfort in that regard.

  3. I was recently wondering about some of these issues. You say that property purchased and debt incurred DURING the marriage is considered joint. But what about property or debt that someone has BEFORE the marriage? If I own a house and then get married, does my husband automatically become half owner? Does my husband inherit my student loan debt? Also, is there anyway to avoid this before one gets married? Can it be overridden by a prenup agreement of sorts?

    I’m not planning on getting married, but some of my friends are, and since they are in their 30s and have both assets and debt, it has been the topic of discussion. I’ve been wondering why people would want to give someone else half of their house, or why someone would want to receive half of someone’s debt.

    • These are important questions. I am going to give you the standard lawyer answer: It depends. It depends on two things. First, whether the property in question is separate property or marital property. Second, where you live – a community property state versus an equitable division state. Marital property is generally defined as anything you earned or purchased during the marriage, unless you specify otherwise. This includes a salary that goes into a joint checking account used to pay household and other living expenses. Separate property includes money or property earned or acquired before you married, gifts given specifically to one spouse, inheritances, property bought by one spouse with the intention that it remain separate, and anything you specifically agree in writing is separate property.

      Community property states consider as marital property almost all property either spouse acquires during the marriage, regardless of whose name is on it. In addition, half of each spouse’s income is owned by the other spouse during the marriage, and all debts incurred during marriage are generally debts of the couple. In equitable division states (i.e. most that are not community property states), the property belongs to whomever’s name is on it. If both names are on the title, you each own a half interest in the property unless the title document says otherwise. If there is no title or deed, you own it if you paid for it or if it was a gift. By the way, the community property states are: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

      So as I said, it depends…I would advise your friends who plan to marry to first consult a lawyer about a pre-nuptial agreement. A well crafted one can clear up a lot of this stuff.

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