California Bankruptcy and Debt: Spousal Liability
Whether or not you are liable for your spouse’s debt will depend on your state of residence. If you are a resident of a community state, you will be liable for the debts of your spouse acquired after you got married. You need not be a co-signor to be liable for the debts of your spouse. You can also be liable even if the debt is not a joint debt.Californiais one of the few community states in theUnited States.
During the Marriage
You will not be liable for any debts acquired by your spouse prior to your marriage. So for example if your spouse availed a student loan before you got married, you will not be liable for the student loan debt of your spouse. Similarly if your marriage ends in a divorce, then you will not be liable for any debts your spouse may incur after the divorce.
Your spouse’s creditors can come after you for collection of your spouse’s debts. They can even obtain judgments against you and take steps including garnishing your wages to collect the debt. Your spouse’s creditors can attach your assets in an attempt to collect the debt.
InCalifornia, all income earned by the spouses during the marriage are considered community property. Likewise any assets purchased with that income is considered as community property owned equally by both spouses regardless of who paid for it and whose name is on the title document. Creditors of one spouse can attach the joint assets for collecting the debts of that spouse.
Certain debts such as court ordered child support or alimony payments from a previous relationship can be collected from the liable spouse only. If one spouse incurred a debt during the marriage but hid the fact of marriage, then the creditor can attach only that spouse’s share of the joint property.
If either spouse individually files for bankruptcy and the community debts were included in the bankruptcy, then upon discharge, the creditors cannot go after the other spouse. However if the other spouse is a co-signor, then the creditors can go after the other spouse. This can be overcome by filing a joint bankruptcy petition. A joint bankruptcy will discharge separate and joint debts of both spouses.
In California you and your spouse can enter into an agreement to have your debts treated separately. A spouse acquiring a debt can enter into an agreement with the creditor to have the debt treated as a separate debt of that spouse alone.