In general, a spouse is not liable for another spouse’s debt. Marriage may be until death do you part, but that does not extend to every debt.
Many consumers simply assume that if a debt collector says they are responsible, that means they are. Spoiler alert: that is not always true. Here are a few examples where consumers are confused about potential liability.
Did you co-sign on a credit card?
Under Minnesota law, a spouse is not liable to a creditor for any debts of the other spouse (see Minn. Stat. § 519.05). The one exception is medical debt, which is discussed at length below.
I regularly meet with consumers who are being pursued by a debt collector for a credit card debt or student loan. In many of those cases, a spouse is being collected on for their ex-spouses debt.
The problem is that the spouse never co-signed on the debt and is not liable for the debt. For example, husband opens credit card. Husband and wife get divorced. Wife starts receiving collection calls about the debt.
That’s problematic. If the wife never co-signed for the credit card, she may not have any liability for the alleged debt. Perhaps the wife was added as an authorized user–but that is generally not enough to attach liability. Identity theft can also come into play if a spouse opened an account without permission and added a co-signer without consent or permission.
Debt collectors do not always have (or keep) very accurate records. In many situations, the debt collector does not know whether a spouse was a co-signer or simply an authorized user. The debt collector may have records or even account statements that list both husband and wife on the credit card statements—but that does not always mean that both parties are co-signers. One spouse may only be an authorized user.
If you are being contacted about a debt that your spouse incurred, be sure to do your research and ask the right questions. Find out if you were a co-signer or simply an authorized user. Ask for the original application (credit card or loan application). If you are unsure about whether you are liable, you should absolutely contact an attorney before making any payment arrangements.
Did you co-sign on a student loan?
With student loans, it is usually easier to determine potential spousal liability. Most federal student loans do not require a co-signer. Many private loans do require a co-signer. That said, many people do not even meet their spouse until after the obtained the loan. If the spouse did not co-sign when the loan originated, it is unlikely they are jointly responsible.
Even if a spouse did co-sign, some private loans have a specific provision to release co-signer liability.
That said, the effect of student loan debt on the household finances can be considerable. For example, if one spouse is paying half of their income towards student loans, that will dramatically impact the monthly budget for the household. While a spouse may not be liable, one spouse’s debt can still cause headaches over finances.
There is joint liability for some medical debts
One exception to the general rule is medical debts. In general, a spouse can be liable for the other spouse’s “necessary medical services.” (Minn. Stat. § 519.05).
For many consumers, the first time they learn of the alleged debt is when they are contacted by a debt collector about their spouse’s debt. Or, they first learn of the debt when they are sued for their spouses’s debt.
As a starting point, it’s a good idea verify whether the alleged charges were submitted to the insurance carrier and whether they were properly processed. In some situations, medical providers either neglect to submit the bill to insurance, or improperly do so.
It’s also a good idea to make sure the medical service was actually provided to your spouse. Lastly, if you determine the debt is valid and you make payment arrangements, make sure you coordinate with your spouse. The last thing you want to do is pay more than the alleged balance and then try and recoup the money after making payments.
Debts from a previous marriage are _complicated_
Ex-spouse does not always mean ex-debt. If you co-signed on a debt with your ex-spouse, you may still be liable for the alleged debt, regardless of what your divorce decree says.
A credit card contract is a contract between you (and your spouse if they co-sign) and a creditor. A divorce decree is a contract between you and your (ex) spouse. Creditors are not a party to your divorce decree. In other words: a divorce decree may not protect you from an ex-spouse’s debt.
However, there are other factors to consider. One, sometimes spouses will fraudulently add another spouse as a co-signer. If you never agreed to be a co-signer, identity theft is a potential defense. Two, if an ex-spouse agreed to pay and close an account, and they racked up a bunch of debt after paying it off (but not closing it), the other spouse may have a number of defenses.
You may, however, be able to use a divorce decree against your ex-spouse. For example, if a consumer is sued on a debt that their ex-spouse said they would pay, the consumer could seek relief in family court pursuant to the divorce decree.
The bottom line, however, is that if you are listed as a co-signer, the creditor can pursue either or both parties for the debt.