- Credit Card companies can sue you if you default on payments.
- Be proactive on dealing with bad debt.
- Community property laws are state specific.
In a community property state, do both spouses share liability for the pre-marital debt of one spouse?
I had a credit card before I met my wife, Feb. 2000, Met my wife in Nov of 2001 and married in July 02, we live in the state of Louisiana. Can the credit card company sue her for the money? I know Louisiana is a community property state but I thought what debt I occurred before we were married was my debt and not hers?
I need to state two important caveats about my following answer:
- Community property is a concept that each state bends and melds with statutes and court law. I can speak of community property in general and California's community property law in particular, but not the other states.
- You mentioned Lousiana. Louisiana law is unique in the US because its roots are not in English common law like all of the other jurisdictions, but in Napoleonic code. My exposure to Louisiana law is limited to its statutes of limitations, and not its family law. See the Bills.com page Louisiana Community Property to learn more about your state's laws.
|Community Property States|
In general, assets and obligations of one partner acquired during the marriage become "community" assets or obligations. This can mean that one spouse can be held liable for the debts of the other spouse even if his or her name was not on the account that resulted in the debt. The same is true for pre-marital debt — pre-marital debt owed by a spouse becomes the liability of the community upon marriage.
In some community property states, one spouse has the ability to create "non-community" assets and obligations. Generally speaking, for a debt to be considered community property, the debt must have been incurred to benefit the community. For example, if the debt were incurred to purchase items for the marital home, it would likely be considered community debt. However, if the debt were incurred to purchase a boat which one spouse never used and which was kept separate from other community assets, the debt may not be considered community debt, and the non-debtor spouse may therefore not be liable. However, this rule is not universal among community property states.
Spousal Liability for Community Property Debt
Let us assume that a creditor files a lawsuit against your spouse for a breach of contract relating to the default on a credit card balance. As mentioned, in most community property states the spouse of the defendant has liability under community property laws. The creditor has the option of file a lawsuit against the defendant's spouse. If the spouse of the debtor is sued, and the state allows spouses to classify some debts as non-community and this particular debt qualifies, then the non-debtor spouse could challenge their liability in court and may be able to avoid a judgment.
Regarding credit card debt, in most community property states, I have not seen creditors file suit against the spouses of credit card holders as a matter of course. I do not understand why this is so, but I imagine it is because credit card issuers may believe they face a more difficult case by filing suit against both spouses. Therefore, if you live in a community property state and your spouse defaults on a credit card, you should be aware that the chances of your being named as a defendant are slim but real nevertheless. If a creditor obtains a judgment against you, the creditor may be able to garnish your wages, levy your bank accounts, and/or place liens on your property.
Find an attorney in your state of residence who has experience in family law or debt law. He or she will be able to ask probing questions, review your documentation, and give you precise answers based on your situation.
I hope this information helps you Find. Learn & Save.
Dealing with debt
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q2 2023 was $17.06 trillion. Auto loan debt was $1.582 trillion and credit card was $1.031 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%.
Each state has its rate of delinquency and share of debts in collections. For example, in South Dakota credit card delinquency rate was 2%, and the median credit card debt was $419.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.