Do I have to pay my spouse’s debts?
That’s a fair question, and one we get asked a lot.
Here is the answer to the question, “Do I have to pay my spouse’s debts?”
When people give themselves in marriage to the one they love on their wedding day, they probably don’t think about arguments, let alone separation or divorce.
But real life, and all its trials and tribulations, happens.
- 40-50% of American marriages end in divorce
What is the leading cause of divorce in America?
According to Ramsey Solutions a leading financial education company, headed by Dave Ramsey:
- The leading cause of divorce in America is money
Second to infidelity.
A study carried out by Ramsey Solutions states that:
“Results show that both high levels of debt and a lack of communication are major causes for the stress and anxiety surrounding household finances…The larger a couple’s debt, the more likely they were to say money is one of the top issues they fight about.
“Almost half of the couples with $50,000 or more in consumer debt say money is a top reason for arguments.”
In the event of a divorce:
- Debts that a spouse accrues before marriage are not their ex-spouse’s responsibility to pay, in most cases
What does Minnesota bankruptcy law say?
You’ll naturally be asking if I have to pay my spouse’s debts.
Minnesota bankruptcy law says a bill in a spouse’s name is not legally the other spouse’s responsibility to pay, unless the debt was accrued during the marriage, and was one of the following:
- A familial expense
- A household expense
- A medical expense
- A cosigned expense
- An expense the other spouse wants to take ownership of (e.g. a vehicle)
You need to remember that:
- Both spouses are responsible for paying a joint debt, or a debt where both names are on the bill
- Debtors are different from authorized users
- Authorized users are given permission to use the card by the cardholder, but are not required to pay the debt back
Which spouse is responsible for paying what debt in the event of divorce?
So which spouse is responsible for paying what debt in the event of divorce?
“Do I have to pay my spouse’s debts?” is something we’re asked often.
You need to know:
- During a divorce, details of your debts are described in a divorce decree
- If a divorce decree is not established, you may have to hash things out in conciliation court
- In the event of separation, the debt responsibility is still the same if the you and your ex still resides together
- If you are separated and can provide a separation order from the court or a lease/utility bill showing different addresses, then the debt responsibility is different
If your divorce case goes to court:
- Debt is divided in a “just and equitable manner”
- The judge decides who pays what debt, regardless of whose name the debt is in
- These details are declared in the divorce decree
What do you need to know about paying debts?
You need to know that:
- A creditor can still sue you even if your divorce decree says your ex-spouse is responsible for paying the debt
- In many cases, if your ex-spouse is not paying the debt, you will need to return to court, and ask the judge to enforce the decree
- If you have made payments in place of the responsible party (your ex-spouse), you should provide the judge with proof of your payment(s) along with the decree
- In regard to real estate, you both have a right to at least part of real property purchased during the marriage, even if it’s only in the name of one spouse
What do you need to know about your creditors?
Here’s what you need to know about creditors:
- If a creditor tells you that you are responsible for your ex-spouse’s debt, then the creditor needs to provide proof (e.g. a signature)
- If your ex-spouse’s creditor sues you, then you need to make sure to “answer” to the lawsuit
- Remember, ignoring a lawsuit could lead to a court declaring you need to pay the debt in full
- Minnesota law does not dictate who pays a debt that accrued in another state, but it does require that the debt is paid regardless
Our recommended divorce and debt tips
If you are getting divorced, we recommend that you:
- Keep thorough and accurate financial records
- Keep track of what you own, and what and who you owe
- Get a written credit report for both you and your spouse to address debt in your divorce
- Have a plan to deal with post-divorce modifications
- Understand how business debt(s), personal loan(s), student loan(s), tax debt, etc. are viewed by the court
- Be aware of a spouse’s entitlement to any value increase of nonmarital item(s)
- Remember property owned prior to marriage can be deemed as marital property by the court
- Don’t deposit earned income during the marriage into a nonmarital account(s), as this is commingling, and will no longer be construed as separate property
- Don’t commingle property
- Don’t use nonmarital funds to purchase nonmarital property during marriage
- Don’t use nonmarital funds to pay off marital debt
- Don’t open a joint bank account with nonmarital funds
- Educate yourself, be honest, and communicate
If you’re getting divorced, asking yourself “Do I have to pay my spouse’s debts?” and worrying about money and bills, then Contact us today at 612.824.4357.
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