Am I responsible for my spouse’s debt after separation/ divorce? This is a common question many of my clients have.
In a recent case in Singapore, a 49-year-old housewife (Madam Lee) with O-level education was asked by her husband to sign mortgage documents for their Katong house for him to secure a loan for his business. Later, the company defaulted on the loan and the bank commenced bankruptcy proceedings against Madam Lee. Her husband has been declared bankrupt.
Assistant Registrar James Lee set aside the statutory demand from the bank (UOB). Madam Lee had argued that she did not know about the effects of the mortgage and her husband had unduly influenced her. She said that there was no lawyer who explained the consequences to her.
UOB, on the other hand, said that a lawyer had explained to her that if the sale proceeds from the house is insufficient to fully cover the debt, UOB is entitled to claim the balance from her. UOB can now appeal the decision, or sue Madam Lim for the money.
See: Selina Lum, “Housewife staves off bankruptcy over husband’s $16m business debt”, The Straits Times, 10 November 2017
Am I responsible for my spouse’s debt after separation/ divorce?
In general, no. For instance, if your spouse had borrowed from a lender under his/ her own name, and there was a guarantor (who is not you), it is unlikely that you will be held responsible for your spouse’s debt after separation/ divorce.
However, in a case like Madam Lee’s, where she had specifically executed mortgage documents for her husband’s company, the situation may be very different.
You may also be interested to read more about: