Understanding Nevada's Community Property Laws: Navigating Spousal Debt Liability

Have you ever wondered how debts work for husbands and wives in Nevada? Let's explore!

In Nevada, there's a rule called community property law. This means if a husband or wife takes on a debt during their marriage, both of them might have to pay it back. So, if one person borrows money, the other might need to help in paying it off.

However, there are some exceptions. For instance, if the debt is connected to something that only one spouse owns by themselves, then only that person might have to pay the debt. The article also discusses something called the 'doctrine of necessaries.' This is a special rule in Nevada that could make one spouse responsible for certain debts of the other.

Learn about how Nevada decides who owns what in a marriage, who has to pay debts that were there before and during the marriage. Also, learn about how being in a relationship similar to marriage, like a domestic partnership, can change things about your property and debts.

Is Nevada a community property state? And how does that affect my debt?

Nevada is one of 10 community property states. You may have liability for your spouse’s debt even if you knew nothing about it. But Nevada’s community property law for spousal debt is tough on creditors, so do not assume you should pay your spouse’s debt. However, a separate law called the doctrine of necessaries may obligate you to pay your spouse’s debt in Nevada. If you are married and reside in Nevada, you must learn if the creditor has the right to collect your spouse’s debt from you.

This article focuses on spousal debt liability, but there’s much more to Nevada’s community property law. See NRS Chapter 123 – Rights Of Husband And Wife and Summary Of Nevada Community Property Law (PDF) to learn how Nevada law handles divorce, property ownership, and credit applications.

Community Property at a Glance

In community property states, the presumption is wealth or debt created during the marriage is part of the community property. Therefore, courts in community property states assume a debt incurred from the date of marriage to the date of divorce is a community debt that is to be divided equally between the spouses.

Many courts in community property states assume the rents, profits, and issues of separate property remain separate. The fruits of community property are community assets. If a spouse claims that a certain property is separate, it is up to that spouse to prove the property was acquired with separate funds or separate credit. For example, the fact that both spouses sign a mortgage does not mean the property cannot be shown to be acquired with separate funds.

By contrast, separate property is property acquired before marriage, and property acquired by a spouse during marriage through gift, inheritance, or an award for personal injury damages.

Spousal Liability For Debt in Community Property States

Let us assume you live in a community property state. A creditor files a lawsuit against your spouse for a breach of contract relating to the default on a credit card balance. In most community property states, the spouse of the defendant has liability under community property laws. The creditor may have the option of file a lawsuit against the defendant’s spouse. If the spouse of the debtor is sued, and the court considers this particular debt as community, then the non-debtor spouse could challenge their liability in court and may be able to avoid a judgment.

Spousal Liability For Debt in Nevada

Nevada is a community property state. Nevada courts presume debts incurred during the marriage as a community obligation. This means in a divorce, community debt is divided equally between the spouses. Spouses can alter this with a pre-nuptial agreement.

When it comes to creditors and debt, a non-borrowing spouse has no liability if the lender relied on the borrowing spouse’s separate personal property to secure the credit. However, both spouses will have liability if if the lender primarily relied on borrowing spouse’s earning capacity to establish the loan (Greear v. Greear, supra, 303 F.2d 893 (9th Cir. 1962)). Known as “intent of the lender” test (Schulman v. Schulman, 92 Nev. 707, 716 n.9, 558 P.2d 525, 531 n.9 (1976); and Dimick v. Dimick, 112 Nev. 402, 915 P.2d 254 (1996)).

As a practical matter, creditors need the signatures of both spouses on a credit application to pursue collection of credit debt from both in Nevada.

Consult with a Nevada lawyer who has family law experience to learn more about Nevada community property law. If you cannot afford a lawyer, contact Nevada Legal Services or another Nevada pro bono program to find low- and no-cost legal services.

Nevada Community Property Law at a Glance

Nevada Doctrine of Necessaries

Nevada residents who wrestle with a spousal debt question must know community property law and the doctrine of necessaries to understand their liability for a spouse’s debt. Nevada’s doctrine of necessaries law is not part of community property law, but it may be very important to you.

The doctrine of necessaries is a law giving creditors a right to collect a certain type of debt from a debtor’s spouse or the parent of a minor child. Some states repealed their doctrine of necessaries laws. Nevada has not. To learn if Nevada’s doctrine of necessaries rule compels you to pay your spouse’s debts, read the Bills.com article Doctrine of Necessaries Rules For All States.