Debts

Husbands and wives may be responsible for debts incurred by the other depending on the nature of the debt as well as where the couple resides. If both husband and wife have co-signed for the debt, both will be responsible for paying it. For instance, assume the husband and wife apply together for a charge card. If both sign the application form and promise to pay the charge bills, both will be responsible for paying off the balance to the credit card company or store, even if only one of them made the purchases and the other disapproved. If a husband and wife co-sign on a mortgage for a home, both of them are potentially liable to the mortgage company, even if one of them no longer lives in the home. Similarly, in community property states, one spouse may be responsible for debts incurred by the other.

A husband and wife also can be responsible for each other's debts, even if they have not co-signed, if the debt is considered a family expense. Some states have family expense statutes that make a husband or wife liable for expenses incurred for the benefit of the family, even if the other spouse did not sign for or approve of the expense in advance. Still other states impose the family expense obligation by common law without a statute. Thus, if the wife charged groceries at a local store or took the couple's child to a doctor for care, the husband could be liable because these are expenses for the benefit of the family.

On the other hand, if the wife runs up bills for a personal holiday or the husband buys expensive coins for his coin collection, the other spouse normally would not be liable unless he or she co-signed for the debt, benefited from the purchase, or approved the purchase. These debts are likely to be viewed as being for the individual benefit of one party and, therefore, the party’s spouse would not be liable for the debt in states that are not community property states (which most states are not). However, in community property states, a husband or wife generally is liable for the debts of the other.

In community property and non-community property states, each spouse generally is not liable for debts the other spouse brought into the marriage. Such debts belong to the spouse who incurred them.

In many states, however, there is an exception to this general rule: a debt incurred before marriage (including a child support debt) could be collected against joint property of a new marriage. Thus, for example, if a man was $15,000 behind in support to children of a first marriage, but the man owned a house or bank account in joint tenancy with his second wife, those assets might be taken by a court to pay off the old debt.

If one spouse owns a business and the other does not, the spouse who does not own the business normally would not be liable for business debts unless the non-owner co-signed on the debt or the couple resided in a community property state.

It is common for institutions that lend money to small businesses to want personal guarantees of payment from the owner of the business, and not just from the business itself. In the event the debt is not paid, lenders would like as many pockets to reach into as possible. If the owner of the business owns a home, the lender may want to use the home as collateral for the business loan. That means that the spouse of the business owner, along with the business owner, may be asked to sign a paper allowing use of the home as collateral. Thus, the home could be lost if the business cannot pay off its debts.

Wives and husbands are entitled to open credit accounts in their individual names. Creditors cannot require a spouse to co-sign on an account unless the party seeking credit lives in a community property state, in which case both signatures can be required since spouses are liable for each other’s debts incurred during the marriage.