Am I responsible for unknown debts acquired by my spouse during our marriage?
This is a question that I receive often from both current and prospective clients. Although a few exceptions exist, the general answer is yes. How can that be?
Arizona is considered a community property state. Meaning, with limited exceptions, all property acquired by either spouse during the marriage is the community property of the husband and wife. Moreover, with limited exceptions, each spouse has the sole management authority, control and disposition rights over the marital community property. In that capacity both spouses likewise possess equal power to bind the community irrespective of the other spouse’s knowledge. As example then, during the marriage, Husband may obtain credit without Wife’s knowledge and both Husband and Wife’s marital community may be held responsible for the debt(s) incurred should Husband default in repayment.
With that said, generally a court will look to determine whether the unknown debt(s) incurred were for a community purpose. Meaning, using the prior example, if Husband charged a vacation for himself and Wife to an unknown credit card, that would most certainly be determined as being for benefit of the marital community and likewise an obligation for which the marital community would remain responsible for repayment. By contrast, using the prior example, had Husband taken significant cash advances on the same credit card to support a gambling habit and he in fact lost that money Wife may argue that Husband’s actions were not for community benefit and therefore he alone should remain responsible for repayment of such obligation(s). That is, when determining allocation for repayment of debts incurred during a marriage, the court may consider excessive or abnormal expenditures, destruction, concealment or fraudulent disposition of property otherwise considered community.
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