Am I Responsible for My Spouse's Debt?

Woman going through her debt

Money is one of the top causes of divorce in the U.S. Money problems usually mean you, your spouse, or both have accumulated enough debt that making the payments is straining the relationship. As you begin to negotiate how your divorce will be resolved, you may find yourself wondering, “Am I responsible for my spouse’s debts?”

This blog post will provide an overview of how Maryland divorce law handles different types of debt. It will cover credit cards, student loans, taxes, and what happens if your spouse files for bankruptcy after your divorce is final.

When Did Your Spouse’s Debt Happen?

The first step in determining whether you are responsible for your spouse’s debt is to look at when he or she accumulated it. Anything either party does before the marriage is considered pre-marital and is assigned to that party in the divorce. This might include the student loans your spouse has been paying off throughout your marriage, or the personal loan taken out to pay for the wedding. If a debt is pre-marital, you should not have to worry about being responsible for it. Credit cards, loans, and other debts either party took on during the marriage may require a little more investigation.

Whose Name is on the Debt?

Once you’ve drawn a line between pre-marital debt and debt incurred during the marriage, the next question is whose name is on each account. If both parties are named on the debt, then a creditor may be able to collect from both parties. You and your spouse may agree on who will make which payments, especially while your divorce or separation is pending, but if your spouse stops paying, you could still be on the hook for collections.

Maryland law addresses contractual debt accumulated during the marriage according to the contracts entered between the debtor(s) and the creditor. Because of contractual liabilities, one way some people are able to avoid being responsible for their spouses’ debt is to keep all debts in one name only. A Maryland family court judge will not reassign debt from one spouse to the other, so you may not be responsible for the individual debts, credit cards, mortgages, or medical bills that are only in your spouse’s name. Please keep in mind, in dividing marital property, the court will consider any debt associated with the property and if your spouse is responsible for the debt, then he or she may also have the right to maintain the related property.

Watch Out for Authorized Users

When a new divorce client steps into the Law Office of Shelly M. Ingram, some of the first questions we ask are: 1) Have you run your credit report? and 2) Is your spouse an authorized user on any of your credit accounts? It is quite common among married couples for the spouse with the better credit rating or pre-approved interest rate to sign up for a credit card or loan and add his or her spouse as an “Authorized User”. While the marriage is healthy, both spouses will use the card for household expenses, and often refer to it as the “family card” or even the “joint card”.

But legally speaking, an authorized user isn’t responsible for the balance of a credit account. Even though you might think that an account is shared between two spouses, and even if you each contributed to paying down the balance, your authorized-user spouse could rack up debt that only you would be liable for after the divorce. That’s one of the reasons it is so important to discuss all your assets and debts with your divorce attorney right away, so you can take steps to protect yourself and your credit during and after the divorce.

Was the Debt Connected to Marital Property?

Maryland contract law may mean you won’t be responsible for your spouse’s debt, but it can also affect the property you receive in a divorce. If a debt in one spouse’s name is directly connected to a particular piece of property, that spouse is most likely going to receive the property as part of the divorce. The logic here is this: if a person is going to be stuck making payments on the car loan, appliance credit account, or furniture purchase, he or she may as well get the benefit of using the car, appliance, or furniture as well.

Can Your Spouse Affect Your Credit Score After Divorce?

The judgment of absolute divorce directs what is supposed to happen after a divorce is final. However, things do not always go according to plan before your divorce, or after the divorce is finalized. If your spouse falls behind on payments for your shared debts, it may affect your credit score. A low credit score or high debt to income ratio may make it harder for you to take out a loan, be approved for a mortgage, or even get a job (some employers look at your credit history in deciding to hire you).

This is one of many reasons why it is so important to monitor your credit both during, and after divorce. You may have options to repair your credit score or enforce your judgments, but if you aren’t regularly monitoring your credit during the separation and divorce process, you may not know that you need to implement these options until it is already too late. You are entitled to one free credit report per year from each of the three main credit reporting agencies. You can find a link to download your credit report for free from the Federal Trade Commission website on our resources page. By taking advantage of the information contained in your credit report, you can reduce the chance that you will be held responsible for credit card debts that you did not incur.

What if Your Spouse Files for Bankruptcy After Divorce?

In the most extreme financial circumstances, one spouse (or both) may face bankruptcy before or after the divorce is final. Bankruptcy can cause you to be held responsible for debts your spouse agreed to pay, even when the judgment of divorce says otherwise. If both spouses’ names are on a debt and your former spouse files for bankruptcy, the creditor or collections company may still try to collect the debt from you. If the debt is joint, you may end up paying all of the debt, including the part your spouse agreed to pay.

There may be language in your judgment of absolute divorce designed to address underpayments by your spouse or overpayments by you. However, this would require enforcement action. If your former spouse files for bankruptcy, it may be difficult to get him or her to pay you back or to indemnify you for debts he or she agreed to pay. It is important for you to talk to a divorce attorney (and maybe a bankruptcy attorney) about your entire financial situation before your divorce is final and as soon as possible upon learning that your former spouse has filed for bankruptcy. If it seems likely that one, or both, of you will need to file for bankruptcy, it may be better to do so before the divorce is final.

When money trouble is pushing you closer to divorce, the last thing you want to hear is that you may be responsible for your spouse’s debt. At the Law Office of Shelly M. Ingram, our divorce lawyers will work with you to help you understand what to expect in divorce and find a resolution you can live with. When creditors come calling after the divorce is final, we can help you enforce your judgment to make sure you don’t pay more than your equitable share. Contact us today to schedule a consultation with an attorney.