Wisconsin Community Property Law & Spousal Debt

Learn if You Must Pay Your Spouse's Debts in Wisconsin

Wisconsin is one of 10 community property states. You may have liability for your spouse’s debt even if you had no knowledge of the account. But Wisconsin’s community property law for spousal debt is tricky, so do not assume you must pay your spouse’s debt automatically. Also, a separate law called the doctrine of necessaries may obligate you to pay your spouse’s debt in Wisconsin. If you are married and reside in Wisconsin, you need to understand if you have liability for your spouse’s debt.

This article focuses on spousal debt liability, but there’s much more to Wisconsin’s Marital Property Act than spousal debt. See The Impact of Wisconsin’s Marital Property Act on Family Law (PDF) and Wisconsin’s Marital Property Law to learn how Wisconsin law handles divorce, spousal rights, 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 marital community. 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 a certain property is separate, it is up to that spouse to prove the property was acquired with separate funds or separate credit.

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.

Wisconsin Law & Community Property

The Wisconsin Marital Property Act classifies debts and gives creditors different collection remedies depending on the type of debt (Wis. Stats. § 766.01(5)). Wisconsin courts must analyze a debt to determine the extent of a married person’s liability for the debt. They must follow a three-step process to classify the debt. The first step is to find what Wisconsin calls the determination date. The determination date is the date spouses and their property become subject to the Marital Property Act. The determination date is after all of the following occur:

1. January 1, 1986
2. The date the spouses were married, and
3. The date that both spouses were domiciled in Wisconsin.

Different collection consequences depend on whether the debt arose before or after the spouses became subject to the Marital Property Act. The date the debt arises would be the date the act or omission creating the obligation occurred (such as the date the debt became delinquent).

Wisconsin Pre-Marital Debt

For debt arising before the determination date, a judgment-creditor or tax authority can collect from any of the following sources:

• All of the separate property of the debtor spouse, and
• Any part of marital property that would have been property of the spouse but for the marriage or the enactment of Wisconsin’s Marital Property Act, and
• The couple’s community property is off-limits to judgment-creditors, but not to the IRS, which can reach the marital property of the debtor spouse, which is presumably half of all community property (Wis. Stats. § 766.55(2)(c) 1. and 2.)

Wisconsin Marital Debt

For debt arising after the determination date, the property judgment-creditors and the IRS may use to satisfy delinquent debt or taxes is different from that which may be used to satisfy a predetermination date debt. The Marital Property Act classifies post-determination date debts as follows:

1. Debts incurred in the interest of the marriage and family (family purpose obligations), and
2. Debts not incurred in the interest of the marriage and family (non-family purpose obligations) (Wis. Stats. § 766.55(1)).

Under the the Marital Property Act, debts arising after marriage and after the effective date of the Act are family purpose obligations. The law therefore assumes that the debt was incurred in the interest of the marriage or family, unless the debtor shows otherwise (Wis. Stats. § 766.55(1)).

With regard to family purpose obligations arising after the determination date, these debts can be collected from any of the following sources:

1. All of the property of the spouse who owes the debt or taxes that is not marital property, and
2. All marital property.

With regard to non-family purpose obligations arising after marriage and after January 1, 1986, these debts can be collected from any of the following sources:

1. All of the property of the spouse who owes the debt or taxes that is not marital property, and
2. 1/2 of marital property. (Wis. Stats. § 766.55(2)(d))

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

Wisconsin Doctrine of Necessaries

Wisconsin residents who deal with a spousal debt question must know community property law and the doctrine of necessaries to understand their liability for a spouse’s debt. Wisconsin’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. Wisconsin has not. To learn more about Wisconsin’s doctrine of necessaries rule, read the Bills.com article Doctrine of Necessaries Rules For All States.