Dear Moneyist,
My husband and I have been married for almost eight years. Prior to marriage we had a prenuptial agreement made, where his RV and truck remained his to do whatever with, as my home and car remained mine.
His RV is his pride and joy, and his “man cave” on wheels. I recently learned that his RV is “upside down.” He owes $75,000 more on it than it’s worth. My concern is that if something happens to him, I will end up with a lien on my home.
My name is not on the RV, nor is his name on my home. Your help and thoughts are very much appreciated. Thank you.
Mary Ellen
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Dear Mary Ellen,
That was a clear prenuptial agreement. What’s yours is yours and what’s his is his, and anything you earn during your marriage is, I presume, shared. More or less. It sounds like you want to commingle your lives, but not your finances. Boys love their toys and he clearly takes great pride in his man cave on wheels, and it was and is important to him that it’s his, and his alone. That’s good news for you: You are not liable for this debt, if his name alone is on the loan.
In community-property states — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin — debt incurred during a marriage is deemed “community” responsibility. That is, both spouses are liable for that debt. In Alaska, newlyweds can choose to opt into community property rules. In other common-law states, spouses can incur debt on credit cards and RV loans during their marriage, and they are solely responsible for them.
There is one major exception to these rules, according to the American Bankruptcy Institute. You are liable for medical debts of your spouse under a legal theory called the Doctrine of Necessities. “The necessities rule is not limited to medical bills. It could apply to utilities, rent, food, clothing and any other necessities, but the most common lawsuit utilizing this legal concept is in the collection of medical debts,” it says. (At least two states, Virginia and Alabama, challenged this.)
“In Nebraska, when you marry someone you also marry their future medical debts. If your spouse incurs medical debts during the marriage, you are liable for the debt. Even if the bills only come in the name of your spouse. Even if you did not sign for the debts. Even if you did not authorize the treatment. Even if you are separated. In Nebraska, when you marry someone you also marry their future medical debts. This doctrine has been accepted in Nebraska courts,” the institute adds.
This does not, however, account for the indirect costs of a spouse incurring debts. You started your marriage with your eyes open, so you should continue in that spirit. Organize a monthly budget so you know where your red lines are on spending, and how much you need to earn to keep the books balanced, and put money aside for an emergency fund. You may also want to see if your husband can cut back on his spending to pay off his RV debt sooner rather than later. You’re a team.
Worst-case scenario: If your husband cannot pay off the debt owed on his RV, it would obviously be repossessed by the company. If you or he lost his job, on the other hand, presumably the other spouse would shoulder the burden and help the other out. If he asks you to help out with the payments on his RV? That’s another question entirely. Hopefully, that won’t happen, Mary Ellen, and you and your husband will have a long and happy life together, and a few memorable trips in his RV.
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com
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