Debts: Are They His, Hers or Ours?

In most married couples, one has a greater tendency than the other to run up debt. When the couple breaks up, the other spouse worries whether they will be liable for the debt their spouse incurred.

This probably sounds as though the answer should be clear and straightforward. But the question may be a little more complicated than it appears at first blush.

For example, is the debt account in the other spouse’s sole name? Or is it a joint account?

This is a key question. If the account is joint, it doesn’t matter which partner actually “spent” the debt.

All account debtors are liable … for the entire amount of the debt. The creditor can go after both debtors or choose the best prospect for recovery.

Now, that’s the story as to the third party creditor. Family court can’t limit the third party creditor’s legal rights.

But family court can order the big-spending spouse to pay off or reimburse the other spouse for all or part of the debt they incurred on their own.

That’s not the only issue either. Even if a debt is in only the other spouse’s name, if the debt is incurred to pay for basic family necessities (“necessaries”), the other spouse may be held liable for the debt as well.

A slightly different question is whether one spouse’s or both spouses’ “stuff” can be made to answer for the other spouse’s debt, regardless of whether, technically speaking, the other spouse is personally responsible for the debt. Unfortunately, the answer to this question varies from state to state and may also vary according to the type of “stuff” the spouses own.

Read more in this Colorado Springs [CO] Gazette article: Money & the Law: Spouse’s debt woes likely your woes, too .