- 8 min read
- Arizona is one of 10 community property states.
- Debt created during marriage in Arizona is presumed to be community debt.
- You may have liability for your spouse's premarital debt in Arizona.
Learn if You Must Pay Your Spouse's Debts in Arizona
Arizona is one of 10 community property states. You may owe your spouse’s debt even if you knew nothing about it.
Arizona’s community property law for spousal debt is complex, so don't assume automatically that you must pay your spouse’s debt. A separate law called the doctrine of necessaries may obligate you to pay your spouse’s debt. If you are married and reside in Arizona, it's important that you learn if you have liability for your spouse’s pre-marital and marital debt.
This article focuses on spousal debt liability. Bills.com readers ask about this issue often, but there’s much more to Arizona’s community property than spousal debt. See Development of Community Property Law in Arizona (PDF) and Arizona Title 25 - Marital and Domestic Relations to learn how Arizona law handles divorce, spousal rights, and credit applications.
|Community Property States|
Community Property at a Glance
In community property states, the presumption is wealth or debt created during the marriage is part of the marital community. Therefore, courts in community property states assume a debt incurred from the date of marriage to the date of divorce is a community debt that is to be divided equally between the spouses.
Many courts in community property states assume the rents, profits, and issues of separate property remain separate. The fruits of community property are community assets. If a spouse claims a certain property is separate, it is up to that spouse to prove the property was acquired with separate funds or separate credit (Arizona Cent. Credit Union v. Holden, 432 P.2d 276, 279 (Ariz. Ct. App. 1967)).
By contrast, separate property is property acquired before marriage, and property acquired by a spouse during marriage through gift, inheritance, or an award for personal injury damages.
Spousal Liability For Debt in Community Property States
Let us assume you live in a community property state. A creditor files a lawsuit against your spouse for a breach of contract relating to the default on a credit card balance. In most community property states, the spouse of the defendant has liability under community property laws. The creditor may have the option of file a lawsuit against the defendant’s spouse. If the spouse of the debtor is sued, and the court considers this particular debt as community, then the non-debtor spouse could challenge their liability in court and may be able to avoid a judgment.
Arizona Law & Community Property
Spouses are presumed to be acting for the benefit of the community when they incur a debt during the course of the marriage. According to the University of Arizona James E. Rogers College of Law, "All property owned by each spouse before marriage is the separate property of that spouse. (A.R.S. § 25-213). The statutes also provide that any inheritance and income earned from rents, issues, and profits of separate property during marriage are separate property. Case law has established certain other acquisitions as separate property as well. These are:
- "Purchases made with separate funds or property
- "Professional degrees and license
- "Damages or benefits for personal injuries, and
- "Certain federal retirement benefits such as social security"
Upon divorce, property be divided approximately equally (A.R.S. § 25-318).
Creditors may not use the separate property of a spouse to satisfy a separate debt of the other spouse. Community property is available to creditors to pay the separate debt of a spouse if the debt was incurred before the marriage and after September 1, 1973, but only to the extent of that spouse’s contribution to the community property that would have been such spouse’s separate property if single (A.R.S. § 25-215).
For real property transactions, or any transaction of guaranty, indemnity or suretyship, the marital community will not be liable for any debt if only one spouse's signature appears on one of the transactions enumerated in the statute for which joinder of both spouses is required (A.R.S. § 25-214(B) and First Interstate Bank of Ariz., N.A. v. Tatum and Bell Ctr. Assoc., 821 P.2d 1384, 1389 (Ariz. Ct. App. 1991)).
In Arizona, a creditor that hopes to reach a married couple's community property assets must file a lawsuit against both spouses jointly (Oyakawa v. Gillett, 854 P.2d 1212, 1217 (Ariz. Ct. App. 1993)).
Consult with a Arizona lawyer who has family law experience to learn more about Arizona community property law. If you cannot afford a lawyer, contact Community Legal Services or another Arizona pro bono program to find low- and no-cost legal services.
|Arizona Community Property Law at a Glance|
|Husband or wife liable for debts of other incurred before marriage?||Community property is available to pay the separate debt of a spouse if the debt was incurred before the marriage and after September 1, 1973, but only to the extent of that spouse’s contribution to the community property which would have been such spouse's separate property if single.|
|Husband or wife liable for debts of other incurred during marriage?||Spouses are presumed to be acting for the benefit of the community when they incur a debt during the course of the marriage.*|
|When do spouses become subject to state community property laws?||When the spouses are married and domicile in the state.|
|Does the state recognize common law marriage?||No, but it recognizes a common law marriage legally established elsewhere.|
|Does the state recognize some from of domestic partnership as an alternative to marriage?||No.|
|Does a domestic partnership under state law create community property rights and obligations?||Not applicable.|
|When does the community property regime terminate (causing subsequently acquired assets or future income to no longer be characterized as community property)?||Change of domicile, death, decree of divorce or decree of legal separation. Also, property acquired after a petition for dissolution or separation or annulment is separate property, if the petition results in a final decree.|
|How is post marital income generated from separate property (e.g., rents, dividends, interest) characterized?||Separate property unless a portion is derived from CP time, effort and skills. If so, an allocation must be made.|
|How does the state characterize appreciation in the value of separate property?||Separate property. If a spouse's labor or community property funds are used to acquire or improve the asset, a right to reimbursement exists, but this does not change the character of the asset.|
|How does the state characterize property taken by spouses under a deed reflecting that the property is held in joint tenancy?||Strong presumption that it is community property. To be a joint tenancy, deed should have language negating the possibility that it is held as community property.|
|How does the state characterize property taken by spouses under a deed reflecting that the property is held in tenancy in common?||Strong presumption that it is community property. To be a tenancy in common, deed should have language negating the possibility that it is held as community property. Rare form of ownership between spouses.|
|Does a deed taken in the name of one spouse as sole and separate property create separate property?||No. Title does not determine the character of the property. It is rebuttably presumed to be community property.|
|Does the state recognize pre or post marital property characterization agreements?||Yes.|
|What are the property characterization agreements called?||Premarital, post marital, prenuptial or postnuptial agreements,|
|Are property characterizations agreements required to be in writing?||Premarital agreements must be in writing.|
|Are property characterization agreements valid against creditors?||Yes, but fraudulent conveyance statutes can be applied.|
|What property is available to satisfy a premarital federal tax obligation assessed against only one spouse?||All separate property of liable spouse. Also, 100% of community property traceable to or contributed by the liable spouse and 50% of all other community property.|
|What property is available to satisfy a post marital federal tax obligation assessed against only one spouse?||100% of all community property and all separate property of the liable spouse.|
|Arizona Community Property law: Arizona Title 25 * A.R.S. § 25-215|
Arizona Community Property Law. Source: IRS and Bills.com
Arizona Doctrine of Necessaries
Arizona residents who deal with a spousal debt question must know community property law and the doctrine of necessaries to understand their liability for a spouse’s debt. Arizona’s doctrine of necessaries law is not part of community property law, but it may be very important to 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!
The doctrine of necessaries is a law giving creditors a right to collect a certain type of debt from a debtor’s spouse or the parent of a minor child. Some states repealed their doctrine of necessaries laws. Arizona has not. To learn more about Arizona’s doctrine of necessaries rule, read the Bills.com article Doctrine of Necessaries Rules For All States.
Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q2 2022 was $16.15 trillion. Housing debt totaled $11.71 trillion and non-housing debt was $4.45 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
Collection and delinquency rates vary by state. For example, in New Mexico, 13% have student loan debt. Of those holding student loan debt, 10% are in default. Auto/retail loan delinquency rate is 6%.
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.