Ningbo Shanghai No. 1 Intermediate Court... The trial ideas and key points of the trial of the joint debt case of husband and wife.

In order to comprehensively improve the judicial ability of judges and the judgment quality of cases, further promote the unification of value orientation and law of similar cases, and realize judicial justice, Shanghai No.1 Intermediate People's Court explores the working mechanism of summing up the judgment methods of similar cases, and refines the excellent judgment experience and judgment methods of judges through summing up the universal and trend problems in various cases to form the standards and methods of judgment of similar cases. Joint marital debt refers to debts incurred by mutual agreement of both spouses, or debts incurred by one spouse in connection with the daily living needs of the family. Debts incurred by one spouse that exceed the needs of daily family life and are not used for the common life or joint production and business activities of the couple do not constitute marital debt. Issues concerning marital property, including marital debts, are an important component of the Marriage and Family Chapter of the Civil Code. The determination of marital joint debts not only bears on the property rights and interests of both spouses but also affects the interests of creditors and the security of transactions. In adjudicating such cases, it is necessary to strictly adhere to the criteria for determining marital joint debts, appropriately allocate the burden of proof, and strike a fair balance in protecting the legitimate rights and interests of all parties involved. To enhance the quality and efficiency of adjudication in such cases, this document, based on typical cases, summarizes and synthesizes the approaches to trial and the key points of judicial decision-making.

1. Typical Cases

Case 1: Determination of the Authenticity of a Debt Zhang and Gao were formerly husband and wife. During the marriage, Zhang’s parents transferred RMB 750,000 to Zhang via bank transfer for the purpose of purchasing a property during the marriage. The remittance slip specified “payment for purchase of residential property,” and the property was registered in the names of both Zhang and Gao. Subsequently, Gao filed a divorce suit against Zhang and requested that the property be divided as marital joint property. Zhang provided a promissory note signed by himself and his parents to prove that the RMB 750,000 housing purchase funds constituted a loan and thus constituted joint marital debt. Gao argued that the promissory note was executed after Zhang’s parents became aware of the couple’s divorce proceedings, and that no genuine loan relationship existed between the parties. Case 2: Determination of whether a debt was incurred for the joint business operations of the spouses. Li and Zhou were formerly husband and wife. Company A was established during the subsistence of the marital relationship. Mr. Li is the legal representative and serves as the executive director, while Ms. Zhou is registered with the Administration for Market Regulation as both the financial officer and the contact person. During the subsistence of their marriage, Li borrowed RMB 3 million from Wang on the grounds that his business required working capital, with Company A agreeing to assume joint and several guarantee liability. After the loan matured, Wang filed a lawsuit in court, seeking to hold Li, Zhou, and Company A jointly and severally liable for repayment. Zhou argued that he is an ordinary employee of Company A, that during the process of Company A’s incorporation, another person used Zhou’s identity information to register the company with the relevant authorities, and that the debt in question does not constitute a joint debt of the spouses. Case 3: How to Allocate the Burden of Proof. Shao and Zhong were formerly husband and wife. Shao borrowed RMB 150,000 from Lv to cover his father’s serious medical expenses. Lv subsequently brought a lawsuit in court, seeking to have both Shao and Zhong jointly repay the loan principal and overdue interest. Mr. Lü argues that the loan was incurred during the subsistence of the marital relationship between Mr. Shao and Ms. Zhong. Since Mr. Shao claimed that his father was suffering from a serious illness requiring substantial medical expenses, it is incumbent upon Mr. Shao and Ms. Zhong to provide evidence proving that the loan constitutes a personal debt; otherwise, it should be deemed a joint debt of the spouses. Zhong, on the other hand, argues that the illness suffered by Shao’s father is a common age-related condition, not a serious disease, and that his father’s medical expenses fall within a reasonable range affordable by the family income. As Shao has failed to prove that the loan was used for his father’s medical treatment, the loan should be deemed Shao’s personal debt. Case 4: Determination of the nature of a debt incurred by one spouse during the period of separation due to marital discord. Shi and Sheng were formerly husband and wife. During the subsistence of their marriage, Shi had a son with another person. Jin had previously lent a large sum of money to Shi. Mr. Jin argues that the loan was incurred during the subsistence of the marital relationship between Mr. Shi and Ms. Sheng and was invested in a company operated by Mr. Shi; therefore, it should be recognized as a joint debt of the spouses. Mr. Sheng argues that when Mr. Shi issued the promissory note, he had already been separated from Mr. Sheng for many years due to a deteriorating marital relationship, and that Mr. Shi had also fathered a child out of wedlock with another woman. Furthermore, the funds specified in the promissory note were neither used for Mr. Shi’s business nor for the couple’s shared household expenses.

2. Difficulties in Adjudicating Cases Involving Joint Debts of Spouses

(I) It is difficult to define household daily life, marital common life, and joint production and business operations.

The difficulty in defining the standard of living for everyday family life is manifested in: uneven economic development, urban–rural disparities, and differences in household members’ asset holdings and consumption patterns, all of which make it challenging to establish uniform, specific criteria for everyday family needs. The difficulty in defining the scope of marital cohabitation is manifested in the fact that evolving household consumption patterns and changing lifestyles have expanded spousal living expenses beyond traditional household expenditures. The difficulty in defining the standard for “joint production and business operations by spouses” is manifested in the fact that the concept of “joint production and business operations by spouses” as set forth in the Civil Code and its related judicial interpretations does not entirely coincide with the meaning of “joint operation” as stipulated in laws such as the Company Law and the Partnership Enterprise Law, as well as their corresponding judicial interpretations. The criteria for determining whether a business operation constitutes joint production and management by a married couple are not uniformly applied in judicial practice.

(II) Difficulty in reviewing evidence acquisition

First, Article 1,064 of the Civil Code provides that debts incurred through joint expressions of intent, such as when both spouses sign together 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 needs of daily family life, shall be regarded as joint debts of the spouses. Debts incurred by one spouse during the subsistence of the marriage, in that spouse’s own name and exceeding the ordinary needs of daily family life, do not constitute joint debts of the spouses; however, this does not apply if the creditor can prove that the debt was used for the common life of the spouses, for their joint production and business operations, or was incurred pursuant to a joint expression of intent by both spouses. Therefore, determining the purpose of the debt is crucial for assessing and ascertaining its nature. The subject matter of such cases typically involves monetary funds, and it is often difficult for creditors and debtors to provide evidence regarding the purpose and flow of these funds within the family after the loan was made. Second, determining whether the marital relationship has broken down—such as whether the couple is living separately, conflicts have escalated, or the marriage is in crisis—is of great significance in ascertaining whether there is an attempt to evade debt obligations and whether the debt was incurred for the common benefit of the family. However, proving the strength or weakness of the marital relationship is no easy task for either spouse or the creditor. Third, in judicial practice, there are cases where both spouses have reached an agreement to incur debt but have not jointly signed to confirm it. Once the unsigned spouse denies it, the court often finds it difficult to establish that both spouses had a mutual agreement to incur the debt.

(III) It is difficult to determine the nature of parents' financial contributions to the nuclear family.

In practice, when a nuclear family faces a marital crisis, parents or their children who have previously made financial contributions to the family often rely on evidence—sometimes supplemented by retroactively signed documents—to request that the court recognize a loan relationship, thereby asserting that the debt constitutes joint marital debt. When it is difficult to determine the establishment of the loan relationship, the results of the courts in this situation are not uniform: some courts believe that under the current background of high housing prices, it is normal for parents to give financial assistance to their children when they buy a house, but this cannot be taken for granted. They believe that except for the parents' explicit donation, it should be regarded as a temporary loan of funds for the purpose of help, and the children should have the obligation to repay; however, another court held that if parents contribute to the purchase of a house for the nuclear family after their children's marriage, it should be recognized as a gift to both husband and wife.

3. Approaches and key points for adjudicating cases involving marital joint debts.

In adjudicating cases involving marital joint debts, the following principles shall be observed: 1. The principle of equal protection—neither spouse shall be required to bear debts that they are not legally obligated to assume, and at the same time, collusion between the spouses to the detriment of creditors’ interests must be prevented. The legitimate allocation of the burden of proof should be used to strike a fair balance in protecting the interests of all parties involved. 2. The principle of combining generality with specificity: Economic development varies across regions, and there are also significant differences in the composition of households. The court shall make a proper determination and render an appropriate judgment based on the prevailing local social customs and the couple’s cohabitation, including factors such as the stated purpose of the loan, the spouses’ social status, occupation, assets, and income. 3. Principle of Complementary Application: The Civil Code does not provide comprehensive and systematic provisions regarding marital joint debts; therefore, in the course of adjudication, the relevant provisions of the Civil Code should be applied in conjunction with the relevant provisions of other laws and judicial interpretations.

(I) Preliminary review procedures for cases involving marital joint debts

The court should first determine whether the debt relationship exists, and then examine whether the debtor and his or her spouse should bear joint and several liability for repayment. Debt relationships should not be narrowly construed as mere lending relationships; they should also encompass other types of contractual obligations, guarantee obligations, and tort liabilities. First, in disputes of this type arising from private lending relationships, courts should focus on examining whether there is an intention to lend and borrow, the flow of funds, promissory notes, and other evidence to ascertain the authenticity of the debt and the purpose of the funds; particular attention should be paid to loans between relatives. As in Case 1, if there is no credible evidence to substantiate the existence of the loan or a mutual agreement among the children’s family to incur joint debt, and the parents contribute funds toward the purchase of a home for the nuclear family after their children’s marriage without explicitly stating that the property is being gifted to one of the children, such contribution should, pursuant to applicable legal provisions, be deemed a gift from the parents to both spouses. Second, because tortious acts possess a specific personal nature, obligations arising from torts generally do not meet the characteristics of marital joint debts; however, this does not apply when one spouse commits a tort in the course of engaging in production, business operations, or other activities, when both spouses jointly commit a tort, or when, pursuant to law, both spouses are required to bear joint and several liability for damages. Third, as a type of debt, guaranteed debts are likewise subject to the legal standards for examining and determining marital joint debts. When one spouse incurs a guarantee liability that is closely related to the couple’s common life or joint business operations, and the benefits derived from the external guarantee are used for their common life or joint business activities, such guarantee liability should be recognized as a joint debt of the spouses.

(II) Circumstances for recognizing debts as joint marital debts and key review points.

1. If a husband and wife reach an agreement regarding a debt, and both spouses have jointly signed, or one spouse has subsequently ratified the debt, or there is other evidence of a joint expression of intent to incur the debt, such debt shall be recognized as a joint debt of the spouses. The mutual consent of the spouses may be expressed either explicitly or implicitly. Express consent includes cases where both spouses jointly sign a loan agreement, or where one spouse indicates consent via telephone, text message, WeChat, or similar means; it also includes acts of ratification by the non-borrowing spouse, such as mortgaging property under their name to secure the loan, or making repayments on the loan after it has been incurred. Implied consent includes conduct that can be reasonably inferred to indicate the spouses’ joint intention to incur a debt, such as remitting borrowed funds into an account actually controlled under the spouse’s name. It should be noted that if the non-debtor spouse becomes aware of the debt after the fact but does not subsequently ratify it, this cannot be deemed as an agreement between the spouses to jointly assume the debt. Both spouses must have the capacity for civil conduct when jointly incurring debt. 2. Debts incurred by one spouse for the daily living expenses of the family: During the subsistence of the marriage, any debt incurred by one spouse in their own name for the needs of the family’s daily life shall be deemed joint debt of the spouses. “Necessary expenses for the daily life of the family” refer to the essential expenditures incurred by both spouses and their minor children living together in their everyday lives, including ordinary costs for food, clothing, housing, and transportation; purchases of daily necessities; medical care; children’s education; support for elderly family members; as well as reasonable entertainment and cultural consumption. The amount and purpose of such expenditures should be consistent with the principles of “ordinariness” and “reasonableness.” The reasonable daily life needs of different families (the amount of family affairs agency) are quite different. When determining whether the debt is "borne by the daily life needs of the family", the following points should be paid attention to: First, the court should comprehensively determine whether the debt exceeds the reasonable daily family affairs agency amount according to the amount of debt, local economic level, loan name, husband and wife's social status, occupation, assets, income and other factors, and in the judgment to set out the process of judgment, reasoning, second, a large amount of debt in a longer period of time after marriage, but each time the amount is small and the debt is indeed used for the daily expenses of the family, should be recognized as the joint debt of husband and wife. 3. Where a creditor seeks to establish that a debt incurred by one spouse in their own name, and which clearly exceeds the scope of ordinary family living expenses, constitutes a joint debt of the spouses, the creditor must prove that the debt was used for the couple’s common life, for their joint production or business operations, or was incurred pursuant to a joint expression of intent by both spouses. (1) Key considerations in reviewing “common marital life”: The scope of “common marital life” is broader than that of “everyday family life.” Spouses’ joint living expenses refer to expenditures incurred through the joint consumption and management of resources by both spouses, resulting in the formation of marital property or the administration of such property in the best interests of the marriage. The following circumstances may be deemed as debts incurred for “shared marital life”: first, substantial expenditures such as the purchase of housing and vehicles, home renovations, leisure travel, and investments; second, expenses incurred by one spouse for participation in education or training, or for receiving major medical services; third, expenses incurred by one spouse for raising minor children—such as overseas studies, private education, medical care, financial assistance for a child’s marriage—and expenses incurred to fulfill parental support obligations. Unless the non-borrowing spouse can demonstrate the source of funds for the aforementioned substantial expenditures. When hearing the case, the court should pay attention to the following points: first, if the debt before marriage is used for the husband and wife to live together after marriage, it can still be regarded as the joint debt of the husband and wife according to its purpose attribute; second, for the situation that part of the large loan is used for the husband and wife to live together and part is used for personal consumption, the court shall deal with it separately according to the actual use after ascertaining the facts, and there is no evidence. (2) Key considerations in reviewing “joint production and business operations by spouses” include three elements: the specific purpose of the debt (i.e., the debt is exclusively used for production and business activities), the joint nature of the spouses’ management, and the sharing of business profits. Among these, the joint nature of a couple’s business operation refers to production and business activities conducted by both spouses through concerted efforts based on their shared intent, which in practice manifests as joint decision-making, joint investment, division of labor and cooperation, and joint management and operation. The joint nature of a business operated by a married couple has consensual participation as its core element, and the criteria for identifying elements of joint operation should be appropriately relaxed. The shared nature of business profits means that, regardless of whether the business operations generate a profit, the business income consistently serves as the primary source of household income or is used for the couple’s common living expenses. When there is clear evidence establishing the specific purpose of the debt and the joint nature of the couple’s business operations, further examination of the sharing of business profits may not be necessary. Conversely, when the joint nature of the couple’s business operations is difficult to ascertain, the determination of whether the debt constitutes a joint obligation of the spouses may be based on the specific purpose of the debt and the sharing of business profits. As in Case 2, finance, human resources, and logistics are among the key functional departments essential to corporate governance. Mr. Zhou served as the accountant and financial officer at Company A, which is sufficient to demonstrate that he participated in the joint management of Company A, and the debt in question should therefore be recognized as a marital debt.

The situation of (III) identified as personal debt and the key points of examination

1. The debt that one party bears in his own name exceeds the daily needs of the family. The debt that one party bears in his own name exceeds the daily needs of the family during the marriage does not belong to the joint debt of the husband and wife. Unless the creditor can provide evidence proving that the debt was used for the couple’s common life, their joint production and business operations, or was incurred based on the joint expression of intent by both spouses. 2. Debts arising from unreasonable expenditures that are clearly unrelated to the couple’s common life, and which are incurred by one spouse and have no connection to the couple’s shared living expenses, do not possess a household-use characteristic and should be classified as personal debts. For example, free guarantee, debts arising from acts such as the purchase of real estate and vehicles by one spouse for the children born to the previous marriage, squandering consumption (such as the purchase of luxury goods that do not match their own consumption ability, debt reward network anchors, etc.), borrowing during separation and not used for family life (such as borrowing to support lovers, raising illegitimate children, etc.), endangering family interests, etc., shall not be recognized as joint debts of husband and wife. 3. False debts and illegal debts do not constitute marital joint debts; obligations incurred for the benefit of the family must be legitimate and lawful. A fictitious joint debt created by one spouse with the intent to misappropriate marital property during divorce does not constitute a joint marital debt. Debts incurred by one spouse as a result of unlawful or criminal activities such as theft, robbery, gambling, or illegal fundraising do not constitute joint marital debt, even if they are incurred for the benefit of the family. If there is any fabrication of debts, the court may impose fines or detention depending on the severity of the circumstances; if such conduct constitutes a crime, criminal liability shall be pursued in accordance with the law. At the same time, if one party engages in conduct that seriously harms the interests of the marital property, such as fabricating joint debts of the spouses, the other party may request a division of the marital property during the marriage. 4. If there is another agreement, it shall be recognized as a personal debt if it is expressly agreed between the debtor and the creditor as a personal debt, or if the agreement between the husband and wife is a separate property system and the creditor is aware of it, it shall also be directly recognized as a personal debt.

(IV) Rules of evidence: Appropriately allocate the burden of proof based on different circumstances.

1. The burden of proof that the husband and wife agree is on the creditor to provide evidence for their own claims, and the creditor should provide evidence to prove that the husband and wife have the intention to borrow together. Such as the husband and wife jointly signed the loan contract, the loan, as well as the husband and wife after the ratification, or telephone, text messages, WeChat and other relevant evidence reflecting the meaning of joint debt, are the creditors to prove that the debt is the husband and wife's joint debt of strong evidence. 2. The debt within the scope of daily family life shall be proved by the creditor. The debtor shall prove the existence of the debt borne by the husband and wife for the daily life of the family. In principle, it shall be presumed to be the joint debt of the husband and wife. The creditor only needs to prove the existence of the debt relationship and the debt conforms to the scope of daily life of the family generally believed by the local government. The creditor does not need to prove that the debt is actually used for the debt. The non-debt spouse can provide information on the family's income, income level, and prove that the amount of the loan is significantly more than the necessary consumption of the family's daily life or that the debt is not used for the family's daily life. Such as case 3, because the amount of debt involved is not large, should be presumed to be a husband and wife for the family's daily life of the debt, so the creditor Lu to prove the existence of the debt relationship has completed its burden of proof, at this time should be non-debt spouse Zhong a proof to refute. Zhong's evidence confirmed that there was a significant difference between the purpose of the loan recorded in the debit note and the actual medical expenses of Shao's father's illness. Lu said that he and Shao were friends and colleagues for many years, but he illegally agreed to a high interest rate of 24% when Shao used the loan for family medical treatment. Shao and Lu are both staff members of small loan companies, and they often have money exchanges; the marriage relationship between Zhong and Shao is short, the two parties have no children after marriage, do not buy large products, Zhong has a stable salary income and savings, so the loan is not used for the daily life of the family. The court combined the above evidence and Shao's refusal to appear in court, and found that Shao's loan was used for the daily life of the family in doubt, and there was no need to borrow money during the existence of the relationship between Shao and Zhong, and then concluded that the loan was a personal debt of Shao. 3. The debt beyond the daily needs of the family shall be proved by the creditor that the debt is used for the husband and wife to live together or jointly produce and operate. When the debt borne by one of the spouses in his own name exceeds the daily needs of the family, the creditor shall prove that the debt is used for the husband and wife to live together or jointly produce and operate, thus proving that the debt is the joint debt of the husband and wife. Given the difficulty creditors face in proving that funds were used for the couple’s domestic expenses, their burden of proof may be appropriately relaxed. The court may examine whether the creditor and the debtor are relatives or friends, the closeness of their relationship, and the extent to which the creditor is familiar with the debtor’s family. After the creditor's proof has reached the standard of proof, if the debtor insists on its defense against the creditor's claim, the debtor shall bear the further burden of proof to prove that the loan was not used for the husband and wife to live together or to produce and operate together.

(V) Examination of Several Special Situations in Cases Involving Marital Debt

1. When determining debts arising during a period of marital instability, disputes over spousal debts should give due consideration to situations in which debts are incurred after the couple has separated or after one party has filed for divorce. The non-debt spouse claims that during the period of debt occurrence, he or she is in serious disagreement with the debtor's spouse, and should provide relevant evidence such as neighborhood committee certificate, rental agreement, family expenditure documents, etc. If there is evidence that the husband and wife are in a stage of marital unrest, and the non-debt spouse has a fixed job and a stable income, does not need to be in debt and does not share the benefits of debt and the income from business investments, it shall be deemed to be the personal debt of the borrowing party. Conversely, if it is determined that the spouses separated to evade debt, or that debts incurred after separation were still used for the common life of the family, such debts shall be recognized as joint debts of the spouses. For example, in case 4, Shi lived with others for many years during the marriage and gave birth to children. Shi and Sheng were indeed in a marital crisis due to the intensification of conflicts. Therefore, it is difficult to determine that Shi used the loan involved in the case for the couple to live together. The debt should be determined as Shi's personal debt. 2. The determination of the nature of the capital contribution of the parent family to the nuclear family The court should pay attention to the examination of the true meaning of the loan between the creditor and the debtor. Considering the blood relationship between the borrower and the lender, the two parties have convenient conditions for the formation of the loan, can not simply rely on the article to simply determine the existence of the loan relationship, but should put forward higher proof requirements for creditors. If there is no solid evidence to prove the fact of borrowing or the agreement of the nuclear family to raise debts together, if the parents contribute to the purchase of a house for the nuclear family after their children's marriage, it shall be recognized as a gift to both husband and wife or a gift to one party according to the registration of property rights. It should be pointed out that in the case of determining the gift to both husband and wife, the parents' contribution should be taken into account when divorcing and dividing the common property of the husband and wife, and an appropriate tilt should be made in the proportion of house division. 3. The following circumstances in which the nature of the debt is determined by more stringent criteria should generally be recognized as personal debt, and if it is recognized as a joint debt of the husband and wife, more stringent standards of proof should be adopted: First, the lender knows that the borrower is heavily indebted, has poor credit, or continues to lend money even though the previous debt has not been repaid. Second, where multiple unreasonable debts have occurred consecutively, and the creditor or debtor provides an unclear account or makes inconsistent statements.

4. Other issues that need to be explained

This article only determines the identification rules of the nature of the husband and wife debt, and does not involve the proportion of the husband and wife's joint debt in the case, the recovery of one party after repayment, and how to separate personal property in the implementation of personal debt procedures.

class case reference: the court comprehensively examined whether the loan was used for the husband and wife living together from the object, time, amount and use of the loan. for the large amount of debt beyond the daily needs of the family, the party who claimed to constitute the common debt had insufficient evidence, and the application was rejected. It can corroborate the judicial approach to determining marital joint debts and the rules for allocating the burden of proof. Trial court: Haishu District People's Court of Ningbo City, Zhejiang Province, Case No.:(2014) Yong Hai Min Chu Zi No. 999; Source: Ningbo Local Marriage Case Bank.