In this blog, we will cover the debt collection laws in community property states and qualifying for a home mortgage. Debt Collection Laws In Community Property States do 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.
What Is A Community Property State?
Community Property is any property that is acquired during a marriage between two people in a community property state. This includes the earnings of the other spouse who is not earning a wage. The liability does not follow the non-responsible spouse outside of marriage. In this article, we will cover and discuss Debt Collection Laws In Community Property States.
What Ends Community Property
In the event the other spouse passes, divorces, or a postnuptial written consent agreement is signed and executed, this would end the liability of debts on community property states. In the event, that there is no community property, the person responsible for the debt will be the person who took out the debt.
Can Creditors Go After My Spouse For My Debts In Community Property States?
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:
- New Mexico
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 of whether or not to make the property they own community property. Consumers living in a non-community property state, will not be responsible for their spouse’s debt.
Debt Collection Laws In The Community Property States Versus Non-Community Property States
For 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. Then makes a determination of which bills need to be paid and the order it needs to be paid.
Am I Responsible For My Spouse’s Debts In Community Property States?
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. 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 your spouse’s debt, collection agencies will still try to call you and try to collect 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. These scavenger debt collectors will try to collect the full amount of the original debt. Check laws in the individual states and find out the statute of limitations on debt.
Check To See The Community Property States And Debt Laws
If a collection agency calls you and tries to collect 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.
This blog on Debt Collection Laws In Community Property States was updated on September 28th, 2022.
September 28, 2022 - 4 min read