The occasional trip to the casino or racetrack can be a fun and harmless outing. But with so many casinos to choose from, especially in the Albuquerque and Santa Fe area, many New Mexicans know from personal experience that gambling can often get out of control. Not infrequently in New Mexico, gambling issues lead to divorce. Divorces are complicated and contentious particularly in the division of property and debt. They become doubly so in the face of gambling debt. Though much of the damage may already be done, there is some relief under New Mexico law for the innocent spouse.
As a community property state, the general rule in New Mexico is that all debts incurred during the marriage are community. This means that upon divorce each spouse shall be responsible for payment of fifty percent of that debt, no matter which spouse actually incurred the debt. However, the New Mexico legislature has recognized the potential unfairness that would result to innocent spouses if the traditional community property rule is applied to gambling debts. As a way of addressing that potential unfairness, the legislature added NMSA §40-3-9.1 to the domestic affairs statutes, which provides that a gambling debt incurred by a married spouse becomes the separate debt of the spouse that incurs the debt.
While the law stating that gambling debts are separate is clear, identifying those debts during a divorce may be tricky. Often gambling debts can be masked as credit card debt because the incurring spouse took out cash advances to pay for gambling. Or parties may take out a home equity loan in order to pay off one spouse‘s gambling debts. Thus, it is very important for parties to a divorce where one or both spouses have incurred gambling debts to consult with an experience New Mexico divorce and family law attorney in order to ensure that a spouse does not wind up taking on debt as part of a community property settlement that should really be apportioned to the other spouse.