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Am I Liable for Debt My Wife Incurred Before Marriage

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Mark Cappel
UpdatedMay 8, 2024

My wife signed a car loan before we were married. If the car is repossessed, will my wages be garnished?

My wife got a car with her dad, she is the primary, and he cosigned the loan before we got married. We got married 4 months after the car was financed. My question is, if the car is repossessed will they be able to garnish my wages?

Two short answers:

  • No, if you live in a state that follows common law
  • Maybe, if you live in one of the 10 states following community property law

Let us discuss the common law states first. With the understanding that your state’s laws may trump the general rule, if a spouse did not co-sign the loan, that spouse is not a party to that transaction. As a consequence, the non-debtor spouse has no contract law or state law giving the non-debtor spouse liability if the signor defaults on the loan.

Community Property States
Alaska*
Arizona
California
Idaho
Louisiana
Nevada
New Mexico
Texas
Washington
Wisconsin
* Optional

Source: Bills.com

However, as I mentioned, your common law state may have different rules. Consult with a lawyer who specializes in family law in your state to get a more accurate answer that reflects your state’s laws and your particular facts.

Spousal Debt in Community Property States

Generally in community property states, debt incurred by a spouse during the marriage for the benefit of the family is considered a “community” debt, and therefore both spouses are responsible for repaying their debts.

Pre-marital debt is tricky to analyze because some community property states specifically exclude pre-marital debt from community debt. Pre-marital debt is considered separate. If you live in a community property state, follow the hyperlinks in the "Community Property States" table in this article to learn more about your state's rules for pre-marital debt.

Doctrine of Necessaries

Many, but not all states have a “doctrine of necessaries” rule. The doctrine on necessaries rule requires spouses to pay for each other’s necessities of life. The doctrine also applies to parents of minor children.

If your state has a doctrine of necessaries rule for spousal debt, you may have liability for your spouse’s debt, even if you were completely unaware of the expense. See the Bills.com article Doctrine of Necessaries Rules For Each State to learn the rules for your state.

Repossession

Let us talk about the repossession. The primary problem with repossession is that the owner will likely be left owing a deficiency balance on the loan, meaning that your wife may still owe a significant amount of money to the lender even though she no longer has the vehicle.

When a vehicle is repossessed, the lender usually sells the car at auction, and applies the amount it receives at auction to the balance owed on the loan. The borrower is generally responsible for any amount of the loan which is not covered by the auction proceeds. The problem is that lenders usually sell repossessed vehicles for significantly less than the cars are actually worth, which can leave a borrower owing thousands of dollars for a vehicle the borrower no longer even owns.

Let Debt Coach Help You

Unsure how to handle your debt? Let the Bills.com Debt Coach tool give you a customized report on your debt resolution options. It’s free!

To learn more about auto loans, I encourage you to visit the Bills.com Auto Loans page.

To learn more about spousal liability of credit card debt, read Is My Spouse Liable for My Credit Card Debt?

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

Dealing with debt

If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2023 was $17.503 trillion. Student loan debt was $1.601 trillion and credit card debt was $1.129 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

The amount of debt and debt in collections vary by state. For example, in Tennessee, 32% have any kind of debt in collections and the median debt in collections is $1892. Medical debt is common and 18% have that in collections. The median medical debt in collections is $888.

While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.

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