My spouse bought a boat and now isn't paying for it. What is my liability for this debt?
My spouse signed a loan for a new boat a few years ago and refuses to pay for it. Since we are married am I responsible for this monthly payment. I have been paying it because of my job. There is no co-signer on this loan. Financial issues are a big concern where I work and has the potential for job termination (considered a security risk).
Generally speaking, if both spouses sign a debt agreement both are jointly liable to the creditor. However, if only one spouse signed the agreement, then depending on which state the agreement was signed or where the spouses now live, the non-signing spouse may have liability.
Spousal liability in community property states
Let us tackle the difficult states first -- the community property states. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin.
If the spouses now live in a community property state, or lived in one at the time the consumer debt account was opened (whether it be a credit card account, or vehicle loan), the non-signing spouse may have incurred liability without signing a contract as co-debtor. If the debt incurred during your marriage was used for the benefit of both members of the marriage, liability may accrue to the non-signing spouse in community property states.
Regarding a non-signing spouse's liability IF the parties are living in a community property state AND the debt was incurred during their marriage for the benefit of both spouses, AND a spouse is sued and a judgment is rendered for a specific amount owed, the judgment can be collected by wage garnishment against any defendant included in the judgment order singularly or simultaneously. The garnishment amount is normally 25% of net income (that is, after withholding) but this varies from state to state. The creditor does not have any duty to "even out" the judgment liability between the spouses. A creditor has the legal right to collect 100% from either spouse, whichever is more convenient for them.
As a practical matter, even in community property states, many creditors do not go to the trouble of suing both spouses, as doing so tends to complicate the legal process involved in obtaining a judgment. However, this does not mean that a particularly aggressive creditor will not pursue all of its available rights to collect a debt.
One important disclaimer: Community property laws are unique to each state -- no two states share the same laws. The discussion above regarding spousal liability is meant to provide general information about community property as a theory. Your state's laws may vary from the general theory. Therefore, it is important to consult with an attorney in your state who can review the details of your situation and give you accurate and precise advice about your rights and liabilities under your state's laws.
Spousal liability in non-community property states
Generally speaking, if the spouses never resided in a community property state, and only one spouse signed the loan contract, then the signatory-spouse is liable for the debt only. Conversely, the non-signatory spouse does not share in his or her spouse's liabilities in non-community property states.
You mentioned you reside in Georgia. If you always resided in Georgia or a non-community property state then you have no liability for the debt. However, if you resided in a community property state when the debt was incurred, then it is possible for the creditor to claim you share liability for a part of the debt.
Be aware that customer service representatives at the creditors may try to convince you that you have liability for the debt. Do not believe legal advice from anyone trying to collect money from you, unless they are your attorney. Legal advice from collection agents is usually incomplete or wrong, and is always self-serving.
More on Georgia law
To learn more about your rights under Georgia law, see the Bills.com resource Georgia Collection Laws. Consult with an Georgia attorney to learn your liability for your spouse's debt. I do not see any liability for you based on the information you provided. However, there may be significant facts you did not include in your message that would result in a different conclusion.
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