Couples often wonder about the debts of their spouses, particularly in this age when spouses frequently operate independently from each other in terms of finances.
The question of whether you will be responsible for any debt incurred by your spouse is really a two-fold question:
1. How does the divorce court see it?
2. How does a creditor see it?
In Utah, as a general rule, the creditor does not hold you liable for the individual debts and obligations incurred by your spouse if your name is not also on the account. However, a divorce judge will often deem marital debt (debt incurred during the marriage) to be joint debt and, therefore, each party would owe 1/2 of that amount. Note, however, that there are numerous variations and exceptions that are too complicated for our purposes here; get the advice of counsel to help determine your risk of debt in a divorce or separation. The best advice is to keep meticulous records of transactions so that it is clear what debt was incurred, for what purpose, if the asset or debt was commingled into the marriage, and who ultimately received the benefit of the expenditure.
From the creditors perspective, individuals are liable for their own torts and debts. No creditor can legally come after an innocent spouse for repayment absent some executed document assuming the obligation.
Spouses, without proper authority, cannot legally convey, transfer, or otherwise encumber the property of their spouse, nor can they sign any legally binding document on behalf of their spouse. Marriage does not imply agency to act for the other spouse. So if your spouse has committed you to something and has left you holding the bag, you may have a way out. The individual circumstances will dictate whether or not you will be liable for debts which your spouse incurred on your behalf (ie. passage of time, apparent authority, power of attorney, unjust enrichment, common practice, etc.) The devil is in the details….
If you want to assume the debt of your spouse then you can agree to assume the obligation in a settlement agreement in a divorce action. This often is done as a way of off-setting for other awards of assets, alimony, etc.
The marital debts remain and will be dealt with at your temporary orders hearing or at the entry of your final decree of divorce. However, as a general rule the separate debts incurred by the spouses after the date of separation will be their separate debts. An example of an exception would be for a fully dependent spouse, or a spouse who needs medical care. The courts will generally require that the parties split the debts associated with those type situations. So be careful if you are considering running up your spouse’s credits cards or incurring additional joint debt so that you have more cash on hand after you’ve separated…you may be eating that debt.
For more information see U.C.A. 30-2- et seq.
Cool be looking out for updates. cheers