Insights

Will Ningbo Loan Stock Trading Freeze Spouse Property

Ningbo Author：LuXu WANG

The stock market fluctuates greatly. Some people rely on their own funds to invest, while others borrow foreign debt and leverage to speculate in stocks. Once the losses burst, the debt will spread to the family. The conclusion first says: whether the creditor can freeze the spouse's property depends on whether the debt formed by the loan and stock speculation constitutes the joint debt of the husband and wife-if one party exceeds the daily needs of the family in his own name, the capital is not used for the joint life or joint production and operation of the husband and wife, and the spouse does not know or ratify it, it is a personal debt. In principle, the creditor can only execute the borrower's personal property, not freeze the spouse's property, if the spouses sign together, ratify afterwards, or if the creditor can prove that the debt is used for the family's common life, joint production and operation, it may constitute a joint debt and the spouse's property will be at risk of execution. Clarify the nature of the debt before talking about the freezing of property.

Rules of determination of 1. joint debt and distribution of proof

Article 1,064 of the Civil Code provides: Debts incurred by both spouses through a joint expression of intent, such as when both sign or when one spouse subsequently ratifies the debt, as well as debts incurred by one spouse in their own name during the subsistence of the marriage for the ordinary needs of daily family life, shall be regarded as joint debts of the spouses. However, debts incurred by one spouse in their own name during the subsistence of the marriage that exceed the ordinary needs of daily family life shall not be considered joint debts of the spouses, unless the creditor can prove that such debts were used for the common life of the spouses, for their joint production and business activities, or were incurred pursuant to a joint expression of intent by both spouses.

This article establishes the principle of "co-debt and co-signing" and the allocation of the burden of proof: small daily family debts are presumed to be joint debts; large debts that exceed the daily needs of the family are first presumed to be the personal debts of the borrower. If the creditor claims joint debts, he must prove that they are used for common life, common production and operation or based on common intention. Loan stock debt is usually large, obviously beyond the "daily needs of the family" (daily necessary expenses including food, clothing, housing, medical education, elderly support, etc.), is a typical "beyond the needs of daily life" situation, the burden of proof on the creditor side-this is the space for the spouse's defense.

It is necessary to distinguish between two pairs of concepts: first, the scope of “household daily living needs” differs from that of “marital life.” Daily household needs refer to daily and reasonable expenses such as clothing, food, housing, transportation, daily necessities, medical care, children's education, support, etc.; the scope of "husband and wife living together" is wider, generally including large expenditures such as house purchase, car purchase, decoration, leisure travel, investment, etc., as well as education and training, major medical care, and fulfillment of maintenance obligations. Loan stock speculation funds may still fall into the "common life" category if they actually flow into the household common account, for joint investment or common consumption. Second, large debts, although formed in a number of small amounts after marriage, but indeed used for the daily expenses of the family, may still be identified as common debts.

Breakdown of 2. situations: under what circumstances the spouse's property will be frozen

  1. Joint signature of spouses or ratification afterwards: if the loan contract and guarantee documents are signed together, or ratification is done afterwards through WeChat or repayment behavior, it constitutes a joint debt, and the property of spouses can be executed.
  2. The loan is used for joint family investments and the management of a joint account.: If the couple's joint account is used for stock trading and the proceeds are used for family life, and the creditor can prove the flow of funds, it may be identified as joint debt.
  3. The loan is all entered into one party's personal account, used for personal stock trading, and the income is used for personal use.: If the spouse is not aware of it and has not benefited from it, the personal debt is usually determined, and the property under the spouse's name should not be frozen.
  4. Loans incurred before or after divorce: Personal debts incurred during marriage do not constitute grounds for discharge upon divorce (from the creditor’s perspective); however, the spouse who has made repayment may seek reimbursement from the debtor. In cases of malicious borrowing prior to divorce or post-divorce transfer of assets, there may also be risks of false litigation and contempt of court.
  5. The creditor has applied for preservation before the lawsuit: in the lawsuit, the creditor can apply for property preservation, and the court can freeze the property in the name of the debtor and the spouse who claims the joint debt according to the application; if the spouse thinks that the preservation is improper, he can apply for reconsideration or provide security to apply for cancellation.

3. The spouse's response steps and list of materials

Once the spouse receives the notice of being sued or preservation, it is recommended to respond as follows:

  1. Fixed evidence of "no knowledge and no ratification": keep the communication records of both parties about borrowing, and the self-admission content that the borrower admits to borrowing money alone to speculate in stocks;
  2. Establishing evidence that the funds were not used for family purposes: Obtain the bank transaction records of the loan proceeds to demonstrate that the funds were deposited into the borrower’s personal account, were not transferred to a family account, and were not used for household expenses.
  3. Submit household income and expenditure materials: prove that the household daily expenses are covered by other incomes, and the stock losses are not used for common living;
  4. The clear defense in the lawsuit: the claim is the personal debt of the borrower, and the creditor is required to prove that it is used for common life or common production and operation;
  5. Timely relief after property preservation: Apply for a reconsideration of the preservation order, or provide security to request the lifting of the freeze on property under your name;
  6. When divorcing, declare debts and property truthfully, and avoid aggravating the responsibility due to concealment and transfer of being identified as malicious.

Analysis of 4. Common Misunderstandings

Myth 1: Money borrowed after marriage is a common debt. Positive Solution: Large debts beyond the daily needs of the family must be proved by the creditor to be used for living or operating together, otherwise they do not constitute joint debts.

Myth 2: If you haven’t signed, you are absolutely not liable.Correct answer: Even if no signature was affixed, liability may still arise if the obligation is subsequently ratified or if the funds were actually used for the common living expenses of the family.

Misconception 3: Stating in the divorce agreement that debts are to be borne by one party is sufficient to protect that party from creditors.Correct answer: Internal agreements are not enforceable against bona fide creditors; however, after the spouse has made payment, they may seek reimbursement from the borrowing party pursuant to the agreement.

Misunderstanding 4: If the other party is in debt, the court will directly seal all my property. Positive solution: before the joint debt is determined, the court only freezes the property of the borrower or the property within the scope of preservation; if the personal debt is determined, the property of the spouse should not be enforced.

5. From the Creditor's Perspective: How to Reduce the Risk of "Winning but Being Unable to Enforce"

For the lender, the most difficult problem of the loan stock-type debt is not the loan itself, but the defense of the debtor's spouse. Prevention is far more effective than remediation.

  1. Signing link: when lending large amount of money, both husband and wife are required to sign together, or set the column of "spouse's informed confirmation" in the loan contract; if they can't sign together, the borrower is required to provide written confirmation or recording of spouse's informed consent to the loan, so as to avoid the lack of evidence of "later recognition.
  2. Capital link: It is agreed that the purpose of the loan is limited to the joint investment or joint production and operation of the family and written into the contract, and the money should be transferred to the account that both parties know as much as possible, and the description of the purpose of the loan should be retained; if the purpose points to personal stock speculation and the spouse does not know, it is difficult to identify the joint debt, and it should be evaluated before lending.
  3. Collection link: invite the spouse to participate in the repayment communication, and fix the meaning of their knowledge and ratification (WeChat confirmation and repayment commitment are regarded as ratification afterwards).
  4. Litigation Stage: When filing a lawsuit, if the spouse is named as a co-defendant, preliminary evidence must be provided to demonstrate that the funds were used for common household expenses or joint business operations (e.g., records of fund flows, evidence of family benefits). In the absence of such preliminary evidence, courts typically limit the proceedings to the debtor’s individual liability, in order to prevent the indiscriminate naming of defendants.

Property preservation The same reason: the application for preservation of the property under the name of the spouse must be based on the preliminary evidence of the existence of joint debts. Only "they are husband and wife" is not enough to freeze the property of the spouse, and the preservation error may also bear the liability for compensation.

6. Enforcement and Remedies: When can the spouse's property be truly enforced?

After the judgment confirms the joint debt of husband and wife, the execution stage can dispose the property under the name of both parties according to law: directly execute the property registered in the name of the borrower; for the joint property of husband and wife, the court can seal up and notify the spouse, execute the share of the debtor (determined after the agreement is divided or the property is analyzed), and keep the spouse's share and living expenses. If the judgment determines the personal debt, only the personal property of the borrower can be executed-at this time, the deposit and real estate under the spouse's name cannot be moved in principle, and if the spouse is wrongly frozen or sealed up, the execution objection may be raised, and if necessary, the execution objection may be filed to exclude the execution.

There are also three operating tips for the spouse: firstly, the spouse must respond to the lawsuit after receiving the court summons, and the default judgment may directly identify the joint debt; secondly, the preservation objection should be timely, and after receiving the preservation ruling, apply to the court for reconsideration in writing, or provide equivalent guarantee to apply for releasing the freezing of their own property; thirdly, if they finally bear the joint repayment responsibility, may be in accordance with the divorce agreement or the relevant provisions of the Civil Code to recover from the borrower, the basis of recovery (transfer vouchers, judgments) to be preserved. Risk Warning: Loan speculators themselves may also face overdue credit, enforcement and even refusal to enforce the risk, rational control of leverage, truthful disclosure of debt to the family, is a more fundamental way out.

Risk management within 7. marriage and debt handling in divorce

For the families who borrow money to speculate in stocks, the starting point of risk management is within marriage rather than after divorce. Several tips: First, family major liabilities should be known and discussed with each other-one party conceals large amounts of debt to speculate in stocks, which not only hurts feelings, but also may leave the risk of "spouse knowing" in the common debt determination; Second, account isolation-family savings are separated from personal investment accounts, and the flow of borrowing funds is clear, which can not only avoid mixing disputes, but also facilitate future proof of "not used for families, borrowing should be cautious-in the name of the individual and leveraged stocks, once the loss, personal debt and family finances will be under pressure, may also affect the spouse credit and children's education arrangements.

There are three steps to deal with the debt in the divorce: the first step is to confirm the nature of the debt-joint debt or personal debt in the divorce agreement or lawsuit, with evidence (loan contract, transfer flow, chat record); the second step is to agree on the proportion of joint debt and specify the internal right of recovery, and the confirmation of personal debt should be borne by the borrower himself; the third step, simultaneous processing of the order of property division and debt settlement-in practice, there is often an imbalance arrangement of "one half of the property, all the debt to one party", the court will combine the fault and benefit situation adjustment. It should be specifically noted that any agreement regarding debts in a divorce settlement does not bind creditors; creditors may still assert their claims against both parties under the rules governing joint and several liabilities. After the non-debtor party has made payment to the outside creditor, it may seek reimbursement from the debtor party by presenting the divorce agreement and proof of payment—this constitutes the proper internal remedy.

Regarding the determination of "the daily needs of the family", the court will judge whether it exceeds the reasonable amount of daily family affairs agency based on factors such as the amount of liabilities, the local economic level, the name of the loan, the social status of the husband and wife, occupation, assets and income; although large debts are formed within a long period of time after marriage, they may still be considered as joint debts if the amount is small and it is indeed used for the daily expenses of the family. For stock-trading liabilities, the name of borrowing (personal investment vs family finance), the flow of funds (personal account vs family co-management account) and the degree of knowledge of the spouse (whether there is participation in the discussion, whether there is joint operation) are the three most critical variables-the defense is the focus of the preparation of evidence.

A common misjudgment is to take "the daily needs of the family" as a universal defense: small and multiple daily consumption loans (living expenses, children's education, etc.) are within the scope of daily family affairs agency, which are joint debts, and it is difficult for spouses to establish the defense of "ignorance; what can really be resisted is" large, one-time, more than daily needs and not used for family "borrowing-stock-type debt is precisely the latter. Therefore, the statement of the spouse's defense should be accurate: "The loan amount is huge, obviously exceeds the needs of the family's daily life, and has not been used for common life or common production and operation, and I have not signed, ratified or benefited". Only with the evidence of capital flow can it be persuasive. To say "I don't know" in general terms reveals the short board of proof.

class case reference: the plaintiff requested to confirm the external loan through his personal hand as the joint debt of husband and wife, but the court rejected it because there was no agreement on joint borrowing and it was not proved to be used for the family's daily life or joint production and operation, and the authenticity of some debts was also doubtful. It can be seen that large personal liabilities are not recognized as joint debts if there is no common meaning or evidence of family use. Trial court: Zhejiang Yuhuan Municipal People's Court Case No.:(2020) Zhejiang 1021 Minchu No. 1355; Source: Zhejiang (non-Ningbo) Marriage Case Library.

8. Frequently Asked Questions

My husband is in debt with a loan to speculate in stocks. Can my creditors freeze my savings?

It depends on whether it constitutes a joint debt of husband and wife: if you have not signed, ratified and the loan has not been used for family life, it is his personal debt, and your deposit will not be frozen in principle.

What if the court has secured my account?

can apply for reconsideration of the preservation ruling, or provide guarantee to apply for lifting the freeze; at the same time, prepare the evidence of "no knowledge, no benefit" and claim personal debt in the lawsuit.

Is it personal debt when the proceeds from stock trading are used for household expenses?

If the creditor can prove that the loan is actually used for the joint investment of husband and wife or the income is used for living together, it may be regarded as joint debt; the key lies in the fact of capital flow and family benefit.

Is a divorce agreement stipulating that he alone bears the debts legally binding?

This agreement is not enforceable against the creditor; however, after you have made payment to the outside party, you may seek reimbursement from the other party pursuant to the divorce agreement.

Can a creditor directly name a spouse as a co-defendant?

You may file a lawsuit, but you must provide preliminary evidence demonstrating that the debt was incurred for common household expenses, joint business operations, or based on a mutual expression of intent; in the absence of such evidence, the court will generally hold only the borrowing party personally liable.