Separate Debt

New Mexico is a community property state.  This means that both the property and the debt acquired during the marriage belong to the community.  As such, the parties are generally each equally obligated on the debt acquired during the marriage no matter how, why or by whom it was incurred.   The law can be pretty harsh in some cases where one spouse did know of, condone or acquiesce in the debt.  Fortunately, there are a few protections for the innocent spouse.  Unfortunately, there are only a few.

Of course, any debt acquired before the marriage or after divorce is separate and the sole responsibility of the party who incurred it.  Any debt incurred after a legal separation is also classified as separate.  This is really the only clear advantage to a legal separation over divorce proceedings.  Debt may also be identified as separate in a debt instrument or contract.  The creditor is bound by those terms and cannot later assert community debt in the collection of the debt.

Debt may be classified as separate due the wrongful action of the party who incurred it.  This comes up most often with gambling debts which are considered the separate debt of the party incurring the debt.  A separate debt may also arise from a tort or personal injury action against one of the parties.  Finally, an unreasonable level of debt incurred after separation may be designated as the separate debt of the party who incurred it.

This brings us to the last possibility.  The Court may designate a debt as separate through the divorce proceedings.  This would include debt that arose after legal separation.  However, creditors are not necessarily bound to Court’s classification.  This leads to the frequent situation where debt has been classified or otherwise attributed to one spouse who fails to pay on that debt.  As a result, the creditor will often seek collection from both parties despite the Court’s classification.  Unfortunately, these efforts are often successful.

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