Debt Collection Laws In Community Property States

This BLOG On Debt Collection Laws In Community Property States Was UPDATED On June 7, 2017

Debt Collection Laws In Community Property States does not make each person liable for each other’s debt.

  • For example, if a spouse in a community property state were to rack up credit card debts, the spouse that is not on the card is not liable for the balance of the debt if the debt goes unpaid.
  • However, the community property is liable for the debt of the spouse but not liable.
  • Community Property is any property that is acquired during a marriage between two people in a community property state and this includes earnings of the other spouse who is not earning a wage.
  • The liability does not follow the non-responsible spouse outside of marriage.

What Ends Community Property

In the event the other spouse passes, divorces, or a post post nuptial written consent agreement is signed and executed, this would end the liability of debts on community property states.

  • In the event if there is no community property, the person responsible for the debt will be the person who took out the debt.
  • I get many questions concerning if a person is responsible for a credit card debt or any other debt for that matter, if their spouse passes away. 
  • This depends on the individual state you reside in. 
  • In a community property state, if you are married, both you and your spouse’s income and debts are counted as joint income, assets, and debts during your marriage. 
  • If your husband or wife passes away, you will be responsible for his or her debt if he or she passes on a community property state but the individual is not liable.

Community Property States

There are nine community property states in the United States.

The nine community property states are the following:

  1. Arizona
  2. California
  3. Idaho
  4. Louisiana
  5. Nevada
  6. New Mexico
  7. Texas
  8. Washington
  9. Wisconsin

The state of Alaska is known as an opt-in community property state where it gives both the husband and wife and/or vice versa the option whether or not to make the property they own community property.

Consumers living in a non community property state, they will not be responsible for their spouse’s debt.

Debt Collection Laws In Community Property States Versus Non-Community Property States

Consumers who live in a non community property state, the spouse’s estate could be responsible for his or her outstanding date.

  • When the estate goes through probate, the estate’s executor is going to take inventory of your spouse’s assets and liabilities and make a determination of which bills need to be paid and the order it needs to be paid. 
  • After paying all of the debts and liabilities of the estate, the remainder of the assets will be distributed to the deceased heirs. 
  • The distribution of assets will be paid to the heirs by the instructions on the deceased will. 
  • If there is no will, the executor of the estate will make that determination by the laws of the state in which the deceased has the assets and if there is a dispute among the heirs, then the courts will decide on the fate of the assets.

Collection Agencies Are Governed By Federal Debt Collection Laws

Although you might live in a non community property state and you are not responsible for you spouse’s debt, collection agencies will still try to call you and try to collect on your spouse’s debt.

  • Even if your spouse’s debt is charged off by the original creditor, there are scavenger collection agencies that will purchase old charged off debts for pennies on the dollar and try to collect the full amount of the original debt.
  • Check laws on the individual states and find out the statute of limitations on debt.

Check To See Community Property States And Debt Laws

If a collection agency calls you and tries to collect on your spouse’s debt, kindly tell them not to contact you anymore because the debt does not belong to you and the responsible person for the debt has passed away.  If they do not leave you alone, contact your state Attorney General’s office and file a complaint because this practice is prohibited and illegal.
The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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