Just as the law in New Mexico treats all property acquired during a marriage as community property, all of the debt incurred during a marriage is viewed as a community debt, for which spouses one-half responsible, regardless of who created that debt. This means that, generally, each spouse is free to create debt in his or her own name during the marriage and it will become a community debt. There is an exception to the presumption of community debt for a mortgage or lease that creates a debt term of longer than five years, in which case both spouses have to sign those contracts in order to create a community debt.
Of course, just like with separate property, a separate debt will be deemed the sole and separate responsibility of the spouse that created the debt when:
- The debt was created before the marriage;
- The spouse creating the debt entered into a written agreement with the creditor identifying the debt as separate;
- The debt was created by separate personal injury or tort committed caused by a spouse;
- The debt was incurred after the parties were separated, but before the divorce, and was exorbitant, unreasonable or did not benefit the community;
- The debt was incurred after the entry of a divorce decree or order of legal separation; or
- The debt was a gambling debt incurred solely by one spouse.
As with property, the purpose of the Marital Settlement Agreement is to identify all of the spouses‘ community and separate debt and to clearly identify which spouse is going to be responsible for payment of that debt after the divorce. Identifying and classifying debt can be very complicated and spouses should be meticulous in gathering records to support their debt division.
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