Thank you for your question about your debt and whether or not your spouse can be subject to collection efforts to collect on your debt.
The Cardholder is Usually Solely Responsible for the Debt
A credit card issuer must file a lawsuit and obtain a judgment against a debtor before taking legal action to force payment of a debt, such as bank levies, wage garnishments, or property liens. If you are the only person listed on the credit card account, then in most cases, the creditor can sue you alone, and if as a result of the lawsuit receives a judgment, the judgment-creditor has the right to levy your bank account and so on.
Consider a few important exceptions to this rule when you determine the risk of not paying this debt. First, if you live in a community property state, the creditor may sue both you and your spouse, under the theory that this debt was incurred as a community debt. Also, if your spouse was a co-signor on this account, even if he or she did not use a card, he or she may will have contractual liability for the debt. However, if your spouse was an authorized user, meaning you simply requested an additional card and he or she never signed a credit agreement, then your spouse has no contractual liability for the debt, but due to your state's community property laws, your spouse may have statutory liability.
Community Property States
Community property is a marital property scheme used in nine states:
- New Mexico
Alaska allows married couples to choose either community property or equitable distribution when determining ownership of marital assets. For that reason, Alaska is often considered a community property state.
Generally speaking, if you live in a community property state, debts incurred during the marriage to benefit the community, such as credit cards used to purchase items that benefit both spouses, are considered community property, and are therefore owed by both spouses regardless of whether both spouses signed the credit card agreement. For example, if you lived in Washington State and incurred debt during your marriage, both you and your spouse, as a marital community, could be sued to collect on the debt. If a judgment were obtained against you, the bank accounts in both your name and your spouse's name could be levied to enforce the debt.
Many creditors do not go to the trouble of suing both spouses in community property states, as doing so tends to complicate the legal process involved in obtaining a judgment. For example, in California, credit card issuers sue the spouse who opened the account. If the creditor chooses to sue only one spouse, and thus obtains a judgment against only the spouse who opened the card, the creditor may levy or garnish the assets of that spouse alone.
If you live in a community property state, and have defaulted on a credit card debt in your name only, consult with an attorney to discuss the liability for you and your spouse. Since community property schemes vary from state to state, it is important to discuss your situation with a legal professional familiar with your state's marital property laws.
Financial Responsibility of a Co-signers and Authorized Users
If your spouse was a co-signer on this debt, meaning he or she signed a credit card agreement when you opened the account, even if that was only to use his or her income in obtaining the desired credit amount, then your spouse is liable for the debt, and thus may be sued by the creditor to collect the debt.
If your spouse was only an authorized user on the account, meaning you simply requested a second card for him or her, but your spouse never signed a credit agreement, he or she is almost certainly not legally liable for the debt. Many consumers confuse co-signers with authorized users. The key difference is authorized users are not legally liable for the debt, and therefore cannot be sued to collect on the debt.
Review the credit card statements and the credit reports for you and your spouse to help determine if your spouse is a co-signer or an authorized user. If your spouse is a co-signer, both your names will likely be listed on the credit card statement. If he or she is an authorized user, the account will likely appear on your spouse's credit report, listing him or her as an authorized user, but your spouse's name will probably not appear on the account statement.
If you do not live in a community property state and your spouse was not a co-signer on the credit card debt in question, then your spouse is probably not legally liable for this debt. Therefore, the creditor should not be able to levy your spouse's bank accounts, garnish his or her wages, or take other action against your spouse in an attempt to enforce the debt.
However, if you reside in a community property state, being an authorized user does not insulate a spouse from community debt liability.
Consult with an Attorney
Consult with an attorney to discuss your situation, your state's laws, and what effects this debt may have on your spouse's assets. Also, be aware of potential tax implications. For instance, if you file a joint return, it is possible to have an expected tax refund diverted to pay off a debt that only one party owes.
If you are struggling to pay your credit card debts, you should explore the various options available to you to assist you in resolving these debts. I encourage you to visit the Bills.com Dept Help page.
I wish you the best of luck in resolving your credit card debts. I hope this information helps you Find. Learn & Save.