Determining whether or not you are liable for your spouse’s debts begins with finding out what property law your state follows. States fall into one of two categories, common law states and community property states.
Common Law States (Florida)
A majority of states follow common law property rules. Under common law, each spouse is recognized as their own entity and can independently own property from one another. Because of this, property owned by one spouse cannot be used to satisfy the debts of the other spouse. Therefore, a spouse can avoid liability simply by owning property or assets separately under their own names. Because Florida is a common law state, there would need to be a signed agreement in order for the court to hold you liable for any debts incurred under the other spouse’s name.
A common example of debt incurred by a spouse is credit card debt. If your spouse has a credit card account only under their name, you are typically not liable for that debt. If the credit card account is under both you and your spouse’s name, you will both be liable, even after divorce. This remains true even if your spouse is the only one who uses the credit card.
Remember, however, that even if the credit card account is only under your spouse’s name, the credit card company can still go after your spouse’s interest in other property that is jointly owned between you and your spouse. Professionals that are exposed to liabilities (doctors, contractors, etc.) should consider putting ownership of family assets (house, bank accounts, etc.) in the name of their spouse to be protected from creditors.
There are other certain circumstances where you may not be legally responsible for the debts of your spouse. Florida courts sometimes look for incurred debt due to the reckless behavior by your spouse. This can include buying unreasonable things for their own benefit or intentionally wasting money.
Community Property States
The states that follow community property rules include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
Community property states view spouses quite differently than common law states. In community property states, both spouses are basically considered one economic unit and cannot own property “separately.” Because of this, most debts incurred by either spouse during the marriage are owed by the “community.” The key here is “during” marriage. Debts incurred before marriage or after divorce are not community debts.
In community property states, all income earned by either spouse during marriage is considered community property, with equal ownership between spouses, and consequently is subject to creditors collecting either spouse’s debt. Thus, in community property states, creditors of one spouse can go after the assets and even the income of the married couple to make good on community debts.
It is important to note that gifts and inheritances received by one spouse, as well as separate property owned before marriage that’s kept separate, are the separate property of one spouse.
Am I responsible for my spouse’s debt after legal separation or divorce?
When it comes to a divorce, these rules above apply. An exception to this is if the parties mutually agree that a debt which would otherwise have been the responsibility of one spouse can be transferred to the other, thus creating a binding contract between spouses. Although that may not make that individual contractually liable to the creditor, failing to pay could result in a breach of contract claim by the other spouse.
