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I reside in Kansas. Do I have liability for my spouse's credit card debt?
My wife has two credit card debts. One is about $1,400 and the other about $2,600. She was diagnosed with a progressive dementia last year and is no longer able to work. The only money she has is a small Social Security disability payment and $5,000 in back payments. My name is not on her credit cards. If we default on those accounts can the companies come after me? We live in Kansas which does not have "community property" law as I understand it. Ids that relevant here? Obviously, her credit rating is of little importance given her illness will eventually be terminal. I would appreciate your advice about these two credit card balances. I am not really able to pay them myself.
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 (such as a credit card account) was opened, the non-signing spouse may have incurred liability without signing a credit 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 (such as a credit card agreement), then the signatory-spouse is liable for the debt. 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 Kansas. If you always resided in Kansas 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 Kansas law
To learn more about your rights under Kansas law, see the Bills.com resource Kansas Collection Laws. Consult with an Kansas 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.
I hope this information helps you Find. Learn & Save.
Best,
Bill
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Did you know?
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q1 2024 was $17.69 trillion. Student loan debt was $1.60 trillion and credit card debt was $1.12 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%.
Collection and delinquency rates vary by state. For example, in District of Columbia, 20% have student loan debt. Of those holding student loan debt, 8% are in default. Auto/retail loan delinquency rate is 8%.
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.
