Community Liability for a Spouse’s Debt in Arizona
Many people have question about community liability for a spouses’ debt in Arizona Specifically, can an Arizona couple’s community property be taken in payment of a debt made separately by the husband? What if the husband incurred the debt in a non-community property state? In Bainum v. Roundy, 521 P.2d 633 (Ariz. Ct. App. 1974), the 9th Circuit Court of Appeals considered these issues.
Husband (Mr. Bainum) and Wife (Mrs. Bainum) were married and lived in Arizona, a community property state. Husband owed Mr. Roundy money for a stock sale in Utah. He signed a promissory note for the debt. Mr. Roundy sued on the promissory note in Arizona. The trial court entered judgment in his favor against both Mr. Bainum and his Wife. The Bainum’s appealed.
The action against Mr. Bainum was filed after the limitations period had passed. The suit would normally be dismissed on this basis. However, Arizona law extends the time when a debtor acknowledges the debt in writing and promises to pay. In this case, the trial court found Husband had acknowledged the debt in a letter to Mr. Roundy. Mr. Bainum wrote: “I am sure we can reach an understanding in a satisfactory arrangement for the repayment of my note.”
Community Property and Separate Debts in Arizona
Debts of a Spouse and Community Property Laws
The trial court ruled that this letter was a signed, written acknowledgment of the debt. As such, it extended the time to file suit. The Court of Appeals agreed. Husband objects to the fact that the judgment was against his Wife, as well as himself. He argues that she could not be held responsible for the debt. He alone executed the promissory note and did so in a non-community property state.
However, the Court of Appeals said that the judgment did not impose liability on Wife. Rather, it subjected the community (composed of Mr. Bainum and Mrs. Bainum) to the debt. In Arizona, the execution of a note by the husband usually binds the community. The question here is whether Husband incurred the debt in a non-community property state.
The Court of Appeals reviewed case law from other jurisdictions. It found that under Utah law, Husband’s debt would subject the couple’s community property to payment, not Wife’s separate property. Therefore it ruled that Mr. Bainum’s and Mrs. Bainum’s community property is subject to the debt involved in this litigation. The Court of Appeals affirmed the judgment below.
Other Articles About Community Property in Arizona
- Community Lien on Sole and Separate Property in Arizona
- Community Lien in Arizona
- Community Liens Separate Property in Arizona
- Community Property and Personal Guaranty in Arizona
- Determining Community Versus Sole Property in Arizona
- The difference Between Community and Separate Property in Arizona
- Disclaimer Deed in a Divorce in Arizona
- Divide Retirement Accounts in an Arizona Divorce
- Dividing Property Not Included in Divorce Decree in Arizona
- Division of Debt in an Arizona Divorce
- Do Rules Regarding Property Apply to Debts in an Arizona Divorce
- Enforce Division of Property and Debt in an Arizona Divorce
- Enforcing a Property Settlement Agreement in Arizona
- Filing a Lis Pendens in a Divorce in Arizona
- How is Property Divided in a Divorce in Arizona
- How to Divide Property in Arizona When a Spouse is Hiding Assets
- Is All Property Community Property in Arizona
- Is Arizona a 50 50 State in a Divorce
- Is Separate Property Divided in Arizona Divorce
- Marital Property Laws in Arizona
- Military Retirement Pay and Divorce in Arizona
- Pensions and Divorce in Arizona
- Separate Property Used to Purchase a Home During Marriage in Arizona
- Sole and Separate Property Divorce Arizona
- Is a Spouse Liable for Credit Card Debt in Arizona
- Stock Options Divided in an Arizona Divorce Case
- Stock Options in an Arizona Divorce
- Unequal Division of Property in Arizona Divorce
- Unfair Separation Agreement in Arizona
- Valuation and Distribution Options For Pensions in an Arizona Divorce
- What is Community Property in Arizona
- What is Separate Property in Arizona
Chris Hildebrand wrote this article to ensure everyone has access to information about family law in Arizona. Chris is a divorce and family law attorney at Hildebrand Law, PC. He has over 24 years of Arizona family law experience and has received multiple awards, including US News and World Report “Top Arizona Divorce Attorneys”, Phoenix Magazine “Top Divorce Law Firms”, and Arizona Foothills Magazine “Best of the Valley” award. He believes the policies and procedures he uses to get his clients through a divorce should all be guided by the principles of honesty, integrity, and, quite frankly, actually caring about what his clients are going through in a divorce or family law case. In short, his practice is defined by the success of his clients. He also manages all of the other attorneys at his firm to make sure the outcomes in their clients’ cases are successful as well.