While debts that are solely in the name of one spouse generally may be considered the debt of that spouse, this is not the case in community property states like New Mexico. Under community property law, financial obligations acquired by either spouse during the marriage are usually considered a community property debt that the court generally will divide evenly between the parties during a marital dissolution. Because credit card balances, individual charges, and other financial liabilities incurred during marriage usually will be treated as community property, it is important to understand some key issues about the division of debts in divorce. Although community property laws differ between states, our Santa Fe Divorce Lawyers have provided some common principles that generally are similar in community property states in terms of the way debts incurred during marriage are handled.
Fault Is Not Relevant
With narrow exceptions, a New Mexico divorce judge does not consider fault issues like infidelity when dividing debts incurred by either party during marriage. Each party typically will be assigned an equal share of the obligation as part of the division of community assets and debts. A corollary to this proviso is that “equal” division of the obligation is not the same as “equitable” division in non-community property states. While the concept of equitable division involves considerations of fairness, equal division means dividing the value of the assets and debts in the marriage right down the middle.
Exceptions might include waste by a spouse, such as when money is diverted toward activities like gambling or drugs. If the court determines the obligation was incurred as an inappropriate expenditure resulting in the depletion of community assets, it may be dubbed “marital waste,” resulting in the debt being assigned to the party who acquired the obligation. However, spouses may disagree on what constitutes waste as the appropriateness of certain types of financial expenditures often constitute motivation for seeking a divorce. If you have concerns about inappropriate expenditures that may constitute marital waste, such as credit obligations for expensive gifts to a mistress or boyfriend, this is an issue that you probably want to discuss with your Santa Fe Divorce Lawyers.
Signature Not Required
Spouses often believe that they cannot be forced by a creditor to pay a debt because they did not sign for the charge. While this might be true in “equitable distribution” states, creditors can pursue either spouse for this type of obligation in a community property state. Even if you are not authorized to sign on the credit card account and do not know the account exists, the creditor still may be able to pursue you for collection of the obligation. There may be a basis to assign such a debt to the other spouse if it can be shown to be a type of marital waste, such as a credit card used to finance gifts during an extramarital affair, but this will not necessarily limit the ability of the credit card company to pursue either spouse.
Because the ill-advised assumption of financial obligations by a spouse may follow a marital partner who is not even aware of the obligation in divorce, it is important to understand all items on one’s credit report during a divorce. Spouses also need to monitor their credit if they have joint accounts that are still open.
The above information is designed solely to illustrate general principles of law, and does not constitute a specific legal opinion on individual cases. We suggest that you contact experienced legal counsel for a specific opinion tailored to your individual circumstances.
If you would like information about the division of debts in a New Mexico Divorce, Jay Goodman & Associates offers a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your situation and answer your questions. Call us today to schedule your free consultation at (505) 989-8117 to learn about your rights and options.