Community Property-Debts Flashcards
What is the general CP rule re debts?
All debts incurred before or during marriage by either spouse are the responsibility of the community. This means that you can reach CP for most debts. Can’t reach SP for most debts.
What are the exceptions to the general debt presumption re premarital debts?
1) Earnings of non-debtor spouse not responsible if the earnings are in a separate deposit account over which the debtor spouse has no control/right to withdraw and there is no co-mingling; 2) child and spousal support related to prior marriage is not the responsibility of CP, and SP of unencumbered spouse cannot be reached. If CP is used to pay child support, can seek reimbursement; 3) tort debt unless the torfeasor spouse’s act or omission that lead to injury was for the benefit of the community. Then Will look to CP first then tortfeasor SP. Generally, will look to SP of tortfeasor then CP.
When can SP be liable for debt of other spouse?
Generally, if there are debts that belong to one spouse, that spouse’s SP is liable for the debt. However, the SP of either spouse is liable for debts incurred during marriage if for necessaries of life such as rent, food, clothing, medical attention as spouses have a duty to support each other. After separation, SP only liable for common necessaries of life (needed to sustain), unless an agreement otherwise.
Can spouses transfer or encumber his/her 1/2 interest in CP?
No can’t unilaterally encumber 1/2 interest except to pay a family law atty in divorce action.
What is intent of lender rule?
There is a rebuttable presumption that property acquired on credit during marriage is a CP debt. The intent of the lender test allows the community to rebut the presumption by showing a lender relied exclusively on SP when extending credit, in which case the debt is that spouse’s SP. If credit is based on earning capacity, then community debt.
