# Debt and community property



## ScrambledEggs (Jan 14, 2014)

I know that debt is held common between spouses in community property states, but if a credit card is in spouse A's name and they stop making payments after the divorce, will the card company have a way of going after spouse B for it either in collections or against their credit? 

I am sure that debt can be assigned legally in the divorce proceeding and that might stand in a civil claim, but I have a feeling the credit company can still hit your credit score if the debt was ever in your name even if it was divided in the settlement. But if the debt was assigned to Spouse A in the divorce, and was never in Spouse B's name, Spouse B should be 'safe' from that debt, right?

I am not looking for specific advice just a general answer that won't cost me a $100 from a lawyer.


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## arbitrator (Feb 13, 2012)

ScrambledEggs said:


> I know that debt is held common between spouses in community property states, but if a credit card is in spouse A's name and they stop making payments after the divorce, will the card company have a way of going after spouse B for it either in collections or against their credit?
> 
> I am sure that debt can be assigned legally in the divorce proceeding and that might stand in a civil claim, but I have a feeling the credit company can still hit your credit score if the debt was ever in your name even if it was divided in the settlement. But if the debt was assigned to Spouse A in the divorce, and was never in Spouse B's name, Spouse B should be 'safe' from that debt, right?
> 
> I am not looking for specific advice just a general answer that won't cost me a $100 from a lawyer.


*In a CP setting, I do believe that the CC companies can legally go after either one of the original marital partners, but only for the amount owed jointly. In essence the CC company can only collect what is owed them ~ they just don't really care who it is that they collect it from! 

The only possible exclusion that I can think of would be if there was the presence of an executed, well-put-together prenuptial agreement that would actually name which partner is to be held responsible for that particular account!*


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## honcho (Oct 5, 2013)

Yes a credit card company can go after both parties for debt after divorce. If your divorce degree says spouse A is liable for X amount and they don’t pay, the cc company will go after you for the amount.

CC companies could care less what a divorce decree says that is only a binding contract between the husband/wife. The cc will chase anyone for the money, if you pay it then you have the right to sue your former spouse to get a settlement based on the fact you have a decree saying who was responsible.

But you have to start a whole new legal case to try and get the money from the former spouse.


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## AMcKineth (Apr 6, 2014)

I thought I knew the answer to this, but I figured it doesn't hurt to ask here also.

My husband bought a house with his ex-wife while they were still married. They're both on the title and the mortgage, not me. I'm pretty sure all the appliances are tied into the mortgage as well. Since this was bought before we were together if it's going into foreclosure will this effect me at all?

It's in a community property state. Where we also got married / are getting divorced.

Thanks everyone in advance.


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## soccermom2three (Jan 4, 2013)

*Re: Re: Debt and community property*



AMcKineth said:


> I thought I knew the answer to this, but I figured it doesn't hurt to ask here also.
> 
> My husband bought a house with his ex-wife while they were still married. They're both on the title and the mortgage, not me. I'm pretty sure all the appliances are tied into the mortgage as well. Since this was bought before we were together if it's going into foreclosure will this effect me at all?
> 
> ...


 If your name isn't on the mortgage then it shouldn't effect your credit at all. 

I've never heard of appliances tied into a loan but I work in escrow in California. It could be different elsewhere. Refrigerators, washers, dryers and free standing stoves are not considered fixtures. Built in ovens, microwaves and cookbook would be.


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## arbitrator (Feb 13, 2012)

honcho said:


> Yes a credit card company can go after both parties for debt after divorce. If your divorce degree says spouse A is liable for X amount and they don’t pay, the cc company will go after you for the amount.
> 
> CC companies could care less what a divorce decree says that is only a binding contract between the husband/wife. The cc will chase anyone for the money, if you pay it then you have the right to sue your former spouse to get a settlement based on the fact you have a decree saying who was responsible.
> 
> But you have to start a whole new legal case to try and get the money from the former spouse.


*A spouse being unduly bothered, that is ordered as the non-paying spouse within the embodiment of a court order, often has to go back to the court of jurisdiction to get an executed court order restraining a CC company from harassing that spouse with collection calls/threatening letters. If the CC company continues to do so afterward, then the Court can legally issue an arrest warrant for any principal in the CC company, which more often than not, would have to go through the auspices of a Federal Court setting ~ a rather expensive proposition!
*


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## honcho (Oct 5, 2013)

The detailed process may vary from state to state. By the time you go thru all the levels of the legal system to even get to a point where you could go the restraining order route you would have spent years chasing it and so much money your lawyer will have a great new addition on his house. 

The best alternative is as part of the final to have both parties just liquidate enough to pay the debts off according to whatever they negotiated or have one party get a new loan to pay off the debt. 

Another which I have seen several cc companies do in divorce is to basically cancel the credit card, take the debt and transfer it solely into one parties name as part of the divorce. It takes a few phone calls and some timing and the lawyers know how to do this or explain the proper steps, they usually don’t because it generally required actual work from the attorney. 

The joint credit card debt then becomes a new loan that is unsecured loan and is only liable by one party. Course they look at ability to pay back etc just like a bank but it’s a cleaner way to do it, though more paperwork it then gets the liability off of one party and most c.c. companies are fairly easy to work with doing it this way. Its easier doing it upfront than chasing a couple of people later on. 

When I used to work as a tax accountant years ago I used to see many cases where it was tax debt being chased and credit cards are the least of your problems once the IRS starts calling. Try getting a restraining order against the IRS…..


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## EleGirl (Dec 3, 2011)

AMcKineth said:


> I thought I knew the answer to this, but I figured it doesn't hurt to ask here also.
> 
> My husband bought a house with his ex-wife while they were still married. They're both on the title and the mortgage, not me. I'm pretty sure all the appliances are tied into the mortgage as well. Since this was bought before we were together if it's going into foreclosure will this effect me at all?
> 
> ...


In this case, you are not party to the debt. You were not married at the time that the debt was made and you are not on the title.

So, I do think that the mortgage company cannot come after you for this debt.


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## EleGirl (Dec 3, 2011)

ScrambledEggs said:


> I know that debt is held common between spouses in community property states, but if a credit card is in spouse A's name and they stop making payments after the divorce, will the card company have a way of going after spouse B for it either in collections or against their credit?
> 
> I am sure that debt can be assigned legally in the divorce proceeding and that might stand in a civil claim, but I have a feeling the credit company can still hit your credit score if the debt was ever in your name even if it was divided in the settlement. But if the debt was assigned to Spouse A in the divorce, and was never in Spouse B's name, Spouse B should be 'safe' from that debt, right?
> 
> I am not looking for specific advice just a general answer that won't cost me a $100 from a lawyer.


In a CC state it does not matter whose name is on the credit card. It does not matter which spouse the debt is assigned to in the divorce. 

If the card is in B's name, the divorce assigns the debt to B but B does not make the payment on the debt, the credit card company can go after A for the debt.

In a CC state, both spouses are responsible for the other's debt made during the marriage, regardless whose name is on the debt.


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## ScrambledEggs (Jan 14, 2014)

Thanks all for your responses. 

I am not sure how the CC company would know to chase you if you where never on the card. It would take manual research in collections. 

That said, this gave me the answer I think.

Since we both have good credit for now, I will insist that CC debt be paid off from liquid assets, or that my spouse do a balance transfer of their portion of the debt to another card after legal financial separation. I assume it would not need to be a new credit card as long as it is not in my name. I bet she will want to sock away all the cash she can and then just default on it and file a bankruptcy. Anyway the more cash she gets out away with, the smoother this should go.


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## EleGirl (Dec 3, 2011)

ScrambledEggs said:


> Thanks all for your responses.
> 
> I am not sure how the CC company would know to chase you if you where never on the card. It would take manual research in collections.
> 
> ...


Good plan ....


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