Creditor Rights Flashcards
General Rules during Marriage
General Rule: the community estate is liable for debts incurred by either spouse before or during marriage
- Child Support and Spousal Support are treated as debt incurred before marriage, so the community estate may be liable (SP of debtor spouse and CP may be liable)
- The community estate has right to reimbursement for CP paid
Exception: A spouse can shield CP earnings from a debt incurred by the other spouse before marriage by:
1. Keeping earnings in separate account in her name only, and
2. not commingling those earnings with other CP
General Rule: a spouse’s SP is liable for debts incurred before or during marriage, but not the other spouse’s debt (only liable for own debts)
Exceptions:
1. A married person is personally liable (both CP and SP) for debt incurred for the necessaries of life while the spouses are living together
a. Necessaries of Life – things that keep you in the lifestyle to which you are accustomed, things that maintain station in life
- A married person is personally liable (both CP and SP) for debt incurred for the common necessaries of life while spouses are living apart (for either spouse or children, debt assigned based on ability to pay)
a. Common Necessaries of Life – basic necessities like food, medical care, rent, clothing
Tort Obligations
Debt for torts is considered to be incurred when the tort occurs
General Rule: if a tortfeasor spouse was performing an activity for the benefit of the community, then the community estate is used first to pay the debt (tort while doing job, etc.)
General Rule: If the tortfeasor spouse was not performing an activity for the benefit of the community, then the tortfeasor’s SP is reached first (intentional torts, criminal activity)
Rules Upon Divorce
Once you are living separate and apart, your earnings are SP, not CP
How to Determine if a Couple is Living Separate and Apart
- Look at conduct, not intent
Marriage of Baragry
H moves out and is living single, but still gets benefits of marriage (goes home for dinners, W does laundry, goes to games with kids, family vacations, joint tax returns. H files for divorce 4 years later
Holding: H’s earnings were not SP, they were still living as a married couple
Takeaway: if living separate and apart, earnings would be SP, but if couple continues the full appearance of marriage, conduct doesn’t indicate separate and apart
- Look for continuing economic ties, emotional ties, social ties, sexual relationship, and attempts at reconciliation
Marriage of Hardin: Evidence of marriage counseling or attempts at reconciliation will lead to a finding of not separate and apart
- Look at parties’ subjective intent as objectively determined by all the evidence reflecting the parties’ words and actions during the disputed time, not what society at large would perceive
Marriage of Manfer
W argues that private conduct of couple should control, H argued that public conduct should control because their separation was kept secret
Holding: court holds that you should look at all relevant facts to determine what the party’s intent was, not just what the public would see
Senate Bill 1255
It is possible to find “Separate and Apart” under these factors, even if living in the same house
Characterizing Debts Upon Divorce
General Rule: Debts are allocated based on when they were acquired
- Debts from before marriage assigned to spouse who incurred them
- Debts from during marriage and before separation:
a. Community Debts divided equally
b. Separate Debts assigned to spouse who incurred them
Educational Loans – assigned to the spouse who received or is receiving the education or training
Tort Liability
1. Torts based on an act performed for the benefit of the community – assigned to the community
2. Torts based on an act not performed for the benefit of the community – assigned to the tortfeasor
When Debts are Greater than Community Assets
1. Excess debt must be assigned as is just and equitable (decided by judge), based on parties’ relative ability to pay and what the debt was for
