Insights

Will the personal debt of the divorced party in Ningbo implicate the common property?

Ningbo Author：LuXu WANG

During the marriage, one party owes debts to the outside world in his own name, can creditors enforce the common property of the husband and wife together when suing? When one party has debts in the name of divorce, will the other party share less property? These questions are very common in Ningbo family counseling, and the answers cannot be generalized. The boundary between personal debt and common debt, the treatment of common property in the execution procedure, and the debt agreement in the divorce agreement jointly determine whether the common property will be implicated.

1. the boundary between personal debt and common debt.

Article 1064 of the the People's Republic of China Civil Code establishes three ways to determine the joint debt of the husband and wife: first, the debt of the husband and wife for the joint signature or the subsequent ratification of one party; third, debts that exceed the daily needs of the family but which the creditor can prove are used for the husband and wife to live together, to produce and operate together or on the basis of the common will of both parties.

1. Debts that exceed the needs of daily life are proved by creditors.

For large loans, operating liabilities and investment liabilities, if one of the spouses does not sign or ratify them, the creditor needs to prove that the money is actually used for the couple's common life or joint production and operation. If it cannot be proved, it is generally recognized as the personal debt of the borrowing party.

2. Common situations that are presumed to be personal debts

debts incurred by one party before marriage, debts incurred by one party for personal violations such as gambling and drug use, debts secured by one party without the consent of the other party, and debts in which funds are explicitly entered into one party's personal account and are not used for family life are usually considered personal debts.

How 2. personal debt affects the joint property of husband and wife.

In principle, the personal debt is paid off by the personal property of the borrowing party, but the joint property of the husband and wife itself contains the share of the borrowing party. Thus, individual debt, while not directly equivalent to common debt, may still affect common property in the following ways.

1. In the execution procedure, the production is analyzed before execution.

When a creditor applies for enforcement of the joint property of the husband and wife, the court usually needs to first analyze the joint property, determine the personal share of the borrowing party, and then enforce that share. One of the spouses may raise an enforcement objection, claiming the division of the common property first.

2. Common property is used to pay debts in the event of divorce.

If, at the time of divorce, the parties agree to repay the personal debts of one of the parties with common property, the agreement is valid between the husband and wife, but cannot be used against unwitting and unconsenting creditors. Creditors still have the right to assert their rights against the borrowing party in respect of the remaining debt.

Joint property of the spouses in the 3. execution procedure

according to the Provisions of the Supreme People's Court on the Seizure, Seizure and Freezing of Property in Civil Enforcement by the People's Court, the people's court may seal up, seize and freeze the property shared by the person subject to execution and other people, and notify the co-owners in a timely manner. If the co-owner agrees to divide the common property and is approved by the creditor, the people's court may determine that it is valid; if the co-owner files a property analysis lawsuit or applies for the executor to file a property analysis lawsuit, the people's court shall grant permission.

1. How a spouse can file an enforcement objection

when joint property is seized, the spouses may file a written objection to the enforcement court, asserting that the property is jointly owned by the spouses and requesting to keep their own half of the share. If the objection is rejected, an action for objection to execution may be brought. It is suggested that the marriage certificate, title registration certificate and other materials proving common ownership should be submitted together with the objection, so as to facilitate the court's review.

2. Initiation of property analysis proceedings

if the parties are unable to reach an agreement on the division of the common property, the spouses may file a separate action for the separation of the property, requesting the court to confirm their share of the common property of the spouses. After the judgment of the property is effective, the enforcement court will enforce the share of the borrowing party.

Path of relief for 4. spouses

in the face of the threat of one party's personal debt to the common property, the spouse can defend its rights and interests from the following angles.

1. Prove that the debt is a personal debt.

If the creditor claims a joint debt, the spouse may prove that the loan was not used for the family to live together, that he did not know about the loan, did not sign it, and did not ratify it. Evidence includes bank running water, loan contracts, chat records, witness testimony, etc.

2. Advocate the separation of personal property from common property.

If the spouse can prove that his or her income, inherited or donated property is separate from the debtor's property, he or she may claim that that part of the property should not be used to pay off the debtor's personal debt.

3. Tilt for property division in divorce

article 1087 of the Civil Code establishes the principle of taking care of the rights and interests of children, women and the innocent party. If one party raises debts or transfers property in bad faith, the other party may claim multiple points in the division of the divorce property.

The validity of the debt agreement in the 5. divorce agreement.

The agreement in the divorce agreement that the debt shall be borne by one party is binding on both parties, but it cannot be used against bona fide creditors.

1. Distinction between internal and external effectiveness

between husband and wife, the agreed debt shall be borne by one party, and one party may recover it from the other party after settlement. However, for the creditor, unless the creditor knows and agrees to the agreement, it still has the right to claim the joint debt of the husband and wife to either party.

2. List of debts in the divorce settlement.

In order to avoid subsequent disputes, the divorce agreement should specify, as far as possible, the amount, creditors, purpose and manner of assumption of the known debt, and agree on the liability of the other party if one party conceals the debt and causes the other party to be recovered.

Evidence and procedural points in 6. practice

dealing with the impact of personal debt on common property requires attention to both substantive and procedural law.

1. The flow of funds is the key

whether the debt is used for the couple to live together ultimately depends on the flow of money. Borrowing into a party's account may be considered a joint debt if it is soon used for family living expenses, joint business or joint repayment, and if it is used for personal consumption, gambling, or transferred to a third party, it is generally considered a personal debt.

2. Time node affects the scope of responsibility

the time of debt occurrence, the time of marriage registration, and the time of divorce, these three nodes together determine which debts belong to the duration of the marriage. Premarital debt is generally personal debt.

7. case proof

in practice, one party borrows millions of dollars from others in his own name during the marriage for personal investment, and the creditor sues for mutual repayment. The court usually examines whether the amount of the loan exceeds the daily needs of the family, whether the money was used for the couple's joint life or joint production and operation, and whether the spouse signed or ratified it. If the creditor cannot prove that it is used for living together, the court usually finds that the debt is a personal debt, which is paid off by the borrowing party with personal property, and the joint property of the husband and wife is first analyzed at the time of execution, and only the share of the borrowing party is executed. In similar cases, the amount of division or compensation is usually in the range of $100000 to $3 million, depending on the size of the property and the circumstances of the evidence.

In practice, one party was enforced because of personal debts, and the court seized the couple's joint property. The spouse raised an objection to the execution and filed a separate property analysis lawsuit, claiming that the property was jointly owned by the husband and wife and that half of its share should be retained. The court usually upholds the spouse's claim for a property, decides that the property is owned by one party and that party pays half of the discount to the other party, or decides that each party has a share of the 50%, and only the borrowing party's share is executed in the enforcement procedure. In similar cases, the amount of division or compensation is usually in the range of $100000 to $3 million, depending on the size of the property and the circumstances of the evidence.

8. Risk Alert

  • the misconception that personal debt does not affect the joint property of the husband and wife at all, ignoring the risk of property analysis in the implementation procedure.
  • Signing a blank IOU or security document results in a personal debt being converted into a joint debt.
  • The divorce agreement stipulates that the debt shall be borne by one party, but the creditor is not notified, resulting in the creditor still being able to recover the other party.
  • The common property was registered in the name of the borrowing party and failed to file an enforcement objection in a timely manner after being seized by the court as a whole.
  • The inability to prove that the borrowing was not used for family life resulted in personal debt being presumed to be joint debt.

9. FAQ

can the court enforce the joint property of the husband and wife for a debt owed by one party?

The joint property of the husband and wife may be seized, but the property shall be analyzed first and only the share of the borrowing party shall be executed. The spouse may file an enforcement objection and, if necessary, file a dissection suit to retain his or her share.

How do you prove that debt is personal debt?

Evidence can be provided from the perspectives of the purpose of the loan, whether the spouse is aware of it, whether the signature is ratified, and the flow of funds. If the loan is not used for family living together, joint production and operation, and the spouse does not sign the ratification, it is usually considered a personal debt.

The divorce agreement says the debt belongs to the other party, why are the creditors still looking for me?

The debt agreement in the divorce agreement is only valid between the husband and wife and cannot be used against bona fide creditors. If the debt is deemed to be a joint debt of the husband and wife, the creditor still has the right to claim it from both parties.

What if common property is executed?

Promptly file a written objection to the enforcement court, claiming to retain half of his share. If the objection is rejected, an action for the execution of the objection may be brought or a separate action for the analysis of the property may be brought.

Practical Experience of 10. Lawyers

personal debt and common debt are two different things, but not common debt does not mean that common property is necessarily safe. The reason is very simple: the common property of the husband and wife already contains the share of the borrower, so even if the creditor can only find him to pay the debt, the court may take measures against the common property as a whole during enforcement, and then separate out his share from it. The most likely mistake the party concerned made was that the debt was not signed by me, which was equivalent to the fact that the suite could not be sealed up by me. As a result, he waited until the house was sealed.

The preparation should be divided into two stages. Before the debt bursts out, separate the common property and personal property: what is in their respective accounts, what is the pre-marital property or the gift that is clearly attributed to only one party, keep the flow of water and vouchers, do not use their own accounts to collect and pay for the other party, and do not sign or endorse the transfer of unknown origin. When it comes to the execution stage, the spouse can raise the objection to the execution and advocate the analysis of the production before the execution, provided that you can tell which part is your own, which requires the accumulation of materials at ordinary times, and it is often too late to cram for the last minute.

In divorce negotiations, debt and property must be discussed together. The agreement should state which debts to bear, although this agreement mainly binds the husband and wife, may not be able to fight against unwitting creditors, but write clearly, in the future the other party or creditors to come to the door, you at least have a basis to reason. More practical is not to easily use half of my debt to exchange property, first find out whether the debt is a common debt, creditors have no evidence, and then decide the room for concessions. If the order is reversed, it is easy to carry an account that you should not have.