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Posted: Wed Sep 05, 2007 8:10 pm

if a husband has a business debt does the wife have to take responsibility to pay it off?

Posted: Wed Sep 05, 2007 9:34 pm

Beautiful.....I have a question. Is this particular debt in BOTH of your names, or JUST his?? If the debt is in BOTH names, it's BOTH of your responsibility to pay it. If JUST in his name, this is HIS debt.

Posted: Thu Sep 06, 2007 6:17 am

Doesn't it depend on whether you live in a community property state? I have always wondered that myself. My husband had his own business too which I wasn't listed on any of the financials so therefore I wasn't liable for them, but I don't live in a community property state.

ladybug

Posted: Thu Sep 06, 2007 8:05 am

I think Ladybug is right. I live in WI and both are responsible for the debt. You cannot get credit or a loan without the spouse being contacted. So it depends on you states laws about this.

Posted: Thu Sep 06, 2007 8:09 am

Exactly right--and it would be good information to have if we had a list of the community property states available on the forums. I know that California is one for starters. Any others?

Posted: Thu Sep 06, 2007 8:12 am

Yes it does depend on which state you live in. Some states keep the husband and wife completely separate unless both names are on a debt, whereas others like Wisconsin go for both. Whenever you fill out a credit application, if you live in WI you have to fill out both yours and your spouse's information. Kind of stinks in a way.

Posted: Thu Sep 06, 2007 3:39 pm

Here is the list of nine community property states.

* Arizona
* California
* Idaho
* Louisiana
* Nevada
* New Mexico
* Texas
* Washington
* Wisconsin

Guest · Posted: Thu Sep 06, 2007 3:44 pm

So, question to you all.
I know my husband has debts...
I used to live in California with my husband. Now I relocated to New York. I don't know where he is at.
Does this community property apply where we CURRENTLY reside?

NUWildcat · Posted: Thu Sep 06, 2007 4:14 pm

Just wanted to note that, community property is really in relation to divorce decrees, not about fiscal responsibility during a marriage. If you think about it, the community property and equitable distribution distinctons, aside from tax and estate implications (such as others mentioned in terms of buying a house, applying for credit or whatever), do not come into play unless or until you get a divorce, otherwise, you don't hear about it. Don't think because you do not live in a community property state that you would be okay and that husband and wife's assets wouldn't be considered comingled. In many states that are not CP states, the assets of husband and wife are considered to be owned by both with a few exceptions.

Having said that. Your issue is tied more to Partnership and Corporation regulations in your state and what sort of business your husband had. Was it a sole proprietership, a partnership, a registered partnership, an LLP, or an LLC? There are other possibilities, but these are the most common.

If your husband's business was registered and if it was some type of a liability partnership, then you (and your assets) will likely not be responsible for your husband's debt. Otherwise, you might be, but that would only be after they tried to get whatever debts are owed from the business and any business partners. If your husband is insolvent, then you may be at risk of having to assume responsibility for the debts.

More importantly, and possibly more worrisome, is that if his business is not a limited liability business of some sort, any assets that you and your husband have in common (such as a home in both of your names) could be at risk (for instance, a lien could be placed against your home).

Again, if there is a liability business set up, then personal assets are usually left alone. However, if there is any sort of fraud or intentional tortious conduct relating to whatever led to the debts, then all bets are off.

*** Keep in mind that each state's community property laws are different (in some cases, very different).

NUWildcat · Posted: Thu Sep 06, 2007 4:42 pm

The questions regarding living in California before and in NY now. All depends.

I'm not clear on whether you are still married to your husband, but that can make a difference. Generally speaking, the laws of the forum state would apply (which is New York). Now, for example, if you and your husband moved to NY in May, and he filed for divorce in June, then the laws of NY would likely not apply and CA laws would rule because this was an obvious attempt to circumvent the community property laws in CA (this happens more than you would likely think, you'd be surprised). If an ulterior motive seems present, especially when one states laws conflict with the state's laws you want to apply, then usually the the old state laws (for you, CA) would be appropriate. But, if you have lived in NY for several years married to your husband, then NY laws will usually apply.
(FYI, if kids are involved, this gets a bit trickier).

In the case of determining which jurisdiction's laws will apply, here are things that will contribute to making that determination - Are you still married? Were you married in CA and how long did you live there when you were married? How long have you lived in NY? Has your husband lived with you the entire time you have lived in NY? What kind of debt does your husband have? Was this debt acquired during your marriage (even if it was only in his name)? These are just a few things that will come into play.

Guest · Posted: Thu Sep 06, 2007 4:46 pm

My husband's business was set not up as a llc, but as a sole proprietership which has now become insolvent. I filed my bk before he filed his would that have had any effect on anything? Crying or Very sad

My bk was discharged in 2003 and his was discharged in 2004 for him.

ladybug

Posted: Thu Sep 06, 2007 4:51 pm

I responded to this but I was stupid and didn't sign in so I don't know where my response went. My husband's business was a sole proprietership. Would that have made a difference when we both declared bk becuz of medical issues and bad investments. I declared mine in 2003 and his was in 2004. That they didn't come after me for his debt?
Embarassed

ladybug

Posted: Thu Sep 06, 2007 6:17 pm

NUWildcat, you are a wealth of knowledge! Thank you for your posts on our forum! You taking the time and helping others with your legal knowledge is awesome! Very Happy

Posted: Thu Sep 06, 2007 6:32 pm

My husband's business was an llc so I wasn't affected when it didn't work out. We were also very careful to keep our accounts separate so that nothing would be my responsibility if things went sour. Unfortunately, despite being very careful and planning, his business, of course affected me as I was having to pay all of the bills due to all of his money being fed back into the business. So, I guess the short and long of it for me was that I wasn't legally responsible for the business, but it sure did kick my butt anyway. Smile

Guest · Posted: Sun Sep 09, 2007 7:04 am

Thank you NUWildcat and all.

<The>

Are you still married? -Yes.
Were you married in CA and how long did you live there when you were married? -Yes and 6 years (three years of which I physically lived in out of country without him, but we filed the tax jointly)
How long have you lived in NY? -One year so that I cannot file the divorce yet.
Has your husband lived with you the entire time you have lived in NY?
What kind of debt does your husband have? - student load prior to marriage and some credit cards I believe.
Was this debt acquired during your marriage (even if it was only in his name)? -I am not sure but everything is supposed to be only his name.

I am considering to file legal separation in New York. That would take out of my responsibility for his debts, I assume.

Thank you again for your inputs.

Posted: Tue Sep 11, 2007 6:45 am

That would probably depend on the state that you are in and whether or not your business is incorporated. In my state, marital assets and debts are shared no matter where they came from or who brought them to the marriage. Being incorporated might help but you would have to check with a legal expert.

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