Are you accountable for your partner's credit card debt?

Law Blog

Although more often than not one partner in a marriage union is not legally responsible for the other's credit card debt, this premise relies on various aspects. Of these, the type of debt as well as when the debt was accrued, are two main considerations. Read on to find out the various legal parameters used to establish who is liable for debt between married partners.

Common law principle

Many states in Australia adopt common law principles to establish which spouse is accountable for debt that was accrued during their union. Generally, the spouse whose name the arrears or liability is in is the one who is considered accountable for it. However, if the credit card bears the names of both spouses, then both spouses are accountable for it in equivalent portions. This entails if the second partner consigned on the same account although it is not regarded a joint account. In this case, the creditors may attempt to incorporate jointly owned assets for clearance of the debt and pursue the other partner's ownership share in such property.

Community property principles

A number of states implement community property principles to ascertain who is accountable for the debt. In such states, spouses are still accountable if the debt is on a shared account or if the debt bears both their names. Nevertheless, both spouses are accountable for community debts, which are simply debts, accumulated during the time of matrimony. This comprises responsibility for debt that was accumulated by one partner and in that partner's name lone. In other words, both spouses are considered liable for any debt accrued by either one of them during the period of marriage. Although this appears as the general principle in such states that follow community property principles, each state can analyse various factors to establish whether a debt is deemed a community debt.

For instance, the court may rule that if the debt was accrued for the benefit of the whole family, then both partners may be responsible for the debt. This includes food, medical care and other such supplies considered essential by state law. The credit card company may trail the other partner if the liable partner lacks sufficient funds to clear this debt. To prove that the debt was beneficial to the entire family, the creditor will have to provide clear and credible proof of such. However, if the liability was accrued to benefit only one spouse, then it may not be categorised under community debt.

Debt upon demise

If the liable spouse passes on, the surviving spouse is usually not responsible for clearing this debt only if it was not a shared account. Nevertheless, the departed spouse's property would be accountable, which can affect the existing spouse. A family lawyer would be expected to pay the arrears out of the estate that was jointly owned by the departed spouse and remaining spouse.

Consult a family lawyer like those at the Chamberlains Law Firm to know whether your state applies common law principle or community property principle to determine which spouse is accountable for debt that was accrued during matrimony.

24 February 2015