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.
Since California is a community property state, the law applies that the community estate shared between both individuals is liable for a debt incurred by either spouse during the marriage. All community property shared equally between husband and wife can be held liable for repaying the debts of one spouse.
If your spouse owns a credit card that is solely in their name, you are not liable for their debt. However, creditors do have recourse to your spouse's share in any assets that you own jointly with them. And if you are a joint account-holder on a credit card, both of you will be liable.
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.
Even though both prenups and postnups cannot act as a sword or a shield in protecting you against creditors, they can do one thing pertaining to debt: both can provide you with indemnification from your spouse.
Even your credit score is independent from their credit score. Can you be responsible for someone else's debt? You are lawfully never responsible for someone else's debt. Whether it's your parent, your partner, or any other person you're associated with, they cannot hold you accountable for money that they borrowed.
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.
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.
At common law, the spouse – typically the husband – was legally liable for the support of the other spouse. This right could be enforced on the spouse, either by the other spouse or by third-party creditors.
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.
The relevant information to focus on here is that California is a community property state, which means that legally married couples jointly own everything – including debt. As a result, it is possible for a creditor to garnish a spouse's bank account if their spouse owes a debt.
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.
Divorce And Debt Responsibility
Who is responsible for the mortgage, car loans and credit card debts? Your debts (and assets) will be shared fairly between the two of you. Your starting point should always be to try to come to an agreement with your ex-partner.
This situation is more about money than law. The law states that half of their income is yours. But if your spouse chooses to ignore this law and cut you off financially you will need a court order to force a spouse to share the income. It will take 90 days to see a judge and to get such a court order.
One of the most important rights of the legal wife is the claim to conjugal properties. Except only when a prenuptial agreement was signed, anything you and your husband owned at the time of marriage, plus properties you have acquired during the marriage are considered conjugal property or community property.
Furthermore, if you've married someone with bad credit, paying off their debt could improve their credit by reducing their debt-to-income ratio. This could later help the two of you qualify for a shared loan, like a mortgage.
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.
If you have any joint debt with your spouse and you can afford to, we highly recommend paying off all marital debt, even before you draw up the divorce papers. If not before you file for divorce, try to get it done before you're officially divorced.
With any joint debts you have – for example, a joint bank loan, overdraft or mortgage – you're usually both liable to repay the whole amount. That means if your ex-partner doesn't pay their share, the bank or building society might ask you to make all the payments.
A clean break settlement means that the parties to the divorce will have no financial ties once the court order is made and implemented. A clean break order will not include any spousal maintenance. It enables both parties to move forward and be financially independent of one another.
Your liabilities include any you've accumulated during your marriage as well as during your divorce.
As part of the divorce judgment, the court will divide the couple's debts and assets. The court will indicate which party is responsible for paying which bills while dividing property and money. Generally, the court tries to divide assets and debts equally; however, they can also be used to balance one another.
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.