Even if your spouse opens up a line of credit in their name only, you could still be liable for that debt. Creditors can go after a couple's joint assets to pay an individual's debt.
Do You Inherit Debt When You Get Married? No. Even in community property states, debts incurred before the marriage remain the sole responsibility of the individual. So if your spouse is still paying off student loans, for instance, you shouldn't worry that you'll become liable for their debt after you get married.
Debt in Community Property States
No matter whether both spouses agreed to the debts, or even whether both knew about them, both are equally responsible to cover them.
Most states follow the same rules derived from common law for determining when one spouse may be liable for the debts of the other. Generally, one is only liable for their spouse's debts if the obligation is in both names. This is true both if one is a joint account holder or just a co-signer.
In common law states, you're usually only liable for credit card debt if the obligation is in your name. So, if the credit card is only in your spouse's name, you're typically not liable for that debt.
Keep separate bank accounts, take out car and other loans in one name only and title property to one person or the other. Doing so limits your vulnerability to your spouse's creditors, who can only take items that belong solely to her or her share in jointly owned property.
According to this law, a person is not liable for a judgment awarded against their spouse. However, aside from money judgments in a lawsuit, there are two exceptions for debts where a person will be held liable for the debt of their spouse.
California is a Community Property State
As a result, it is possible for a creditor to garnish a spouse's bank account if their spouse owes a debt.
A judgment debtor can best protect a bank account by using a bank in a state that prohibits bank account garnishment. In that case, the debtor's money cannot be tied up by a garnishment writ while the debtor litigates exemptions.
Learn about your rights. Creditors may be able to garnish a bank account (also referred to as levying the funds in a bank account) that you own jointly with someone else who is not your spouse. A creditor can take money from your joint savings or checking account even if you don't owe the debt.
In many states, some IRS-designated trust accounts may be exempt from creditor garnishment. This includes individual retirement accounts (IRAs), pension accounts and annuity accounts. Assets (including bank accounts) held in what's known as an irrevocable living trust cannot be accessed by creditors.
The general rule in California is that a spouse ceases to be responsible for any debts incurred by the other spouse once they have separated.
Financial infidelity is when couples with combined finances lie to each other about money. Examples of financial infidelity can include hiding existing debts, excessive expenditures without notifying the other partner, and lying about the use of money.
If you live in one of the community property states – Arizona, Wisconsin, California, Washington, Idaho, Texas, Louisiana, New Mexico or Nevada – the law treats all the money you saved as being equally owned by both of you.
Matrimonial debt on divorce
These “matrimonial” debts would typically include debts incurred to fund building work and improvements to the family home, family holidays or the family car.
If you signed on a loan as the borrower or if you cosigned a loan for your spouse, you are legally liable for the debt that accompanies it. Any late fees charged due to a spouse's delinquent payments will also legally be your responsibility — even if they tell you that they'll take care of it.
In common law states, debt taken on after marriage is usually treated as being separate and belonging only to the spouse who incurred them. The exception are those debts that are in the spouse's name only but benefit both partners.
The first step to stopping debt collectors from calling you is telling them the 11-word phrase - “Please cease and desist all calls and contact with me, immediately.”
A bank account levy allows a creditor to legally take funds from your bank account. When a bank gets notification of this legal action, it will freeze your account and send the appropriate funds to your creditor. In turn, your creditor uses the funds to pay down the debt you owe.
A frozen bank account is a sure sign that a creditor or debt collector has obtained a court judgment against you (or your joint account holder, if you have a joint bank account). A creditor or debt collector cannot freeze your bank account unless it has a judgment.
If a debt collector has a court judgment, then it may be able to garnish your bank account or wages. Certain debts owed to the government may also result in garnishment, even without a judgment.