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Which spouse is on the hook for secret debt during divorce?

On Behalf of | Dec 2, 2011 | Divorce |

Even while married, spouses can live separate financial lives. While sometimes this arrangement is by design, other times one spouse might be making financial transactions behind the other person’s back. So if one spouse takes out secret credit cards and racks up debt unbeknownst to their husband or wife, is that other spouse responsible for half the debt after a divorce?

It is a very valid question in Louisiana, which is considered a community property state in terms of property settlement during a divorce. This means that all the debt accrued during the course of a marriage is considered community debt, and both spouses are responsible to pay it off. In fact, if one spouse racks up $20,000 of debt behind the other’s back, and later cannot pay it, creditors might even come after the unassuming spouse for the full sum of money.

The aforementioned scenario is one that plays out all too often; sometimes children even do it to their parents. The good news for those that experience this during their divorce is that individuals have a chance in court to prove that fraud was involved. If a spouse takes extreme measures to hide the debt, the other spouse can provide that evidence in court. A judge can therefore order that the spouse responsible for the debt has to pay it off.

The downside is that creditors do not care about the judgment made in divorce court. They simply want their money from wherever they can get it. If the guilty spouse still does not pay and creditors come after the innocent spouse, that individual will have to inform the court that the other has breached the divorce agreement.

Source: CreditCards.com, “Sally Herigstad: Who pays secret debt in divorce?” Sally Herigstad, Nov. 18, 2011

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