When it comes to separate debts and community property rules, here are some things to keep in mind when going through the divorce process. Whether or not you or your spouse would be liable for the other’s debts depends largely on where you live. In the state of Arizona, community property rules apply which means that debts that have been incurred by one spouse over the course of the marriage are technically owed by both spouses. In these community property states like Arizona, the debts incurred by one or the other spouse during the course of the marriage are technically considered community property even if only one spouse’s name is on the debt. The concept of “joinder” – meaning, the requirement that both parties sign onto a debt in order to make it community in nature – applies in only a few situations..
When Were the Debts Incurred?
The critical factor here is whether or not the debts were incurred during the marriage. All debts incurred during the marriage are presumed to be community in nature. A Decree of Dissolution or Legal Separation would allocate how those debts should be paid after the relationship ends. However, a creditor is not required to only pursue enforcement of a debt only against the party assigned that debt in such a Decree.
Property Taken to Pay Debts
In community property states like Arizona, creditors of one spouse have the potential to go after the income and assets of the married couple in order to satisfy joint debts. The majority of debts incurred during the marriage are considered joint debts in Arizona. It does not matter whose name is on the title to the assets in this particular situation. In community property states you may be eligible to sign an agreement, called a Premarital, Prenuptial, or even Postnuptial/Postmarital, Agreement, with one another in order to have your income and debts treated separately. There are different rules for when a creditor tries to go after community property to satisfy one spouse’s pre-marital debt. In that instance, the creditor can try to tap a community asset only to the extent of the value of that debtor-spouse’s interest in the community property (generally, one-half).
What Documents Can Address These Issues?
A prenuptial or postnuptial agreement can serve a critical purpose in this instance. This planning tool can help to prevent a lot of confusion down the line. Once a Decree of Dissolution or Legal Separation is entered, a spouse who is non-compliant with a debt allocation may need to be taken back to Court to comply with the Decree.
There are many different confusing aspects of indebtedness as it relates to getting divorced in Arizona that warrant the insight of a knowledgeable Arizona divorce attorney.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Separate Debts and Community Property Rules, or any other family law issue, please feel free to contact Steven H. Everts at 480.461.5300, log on to udallshumway.com, or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.