Until “Debt” Do Us Part? What You Should Know If You Married Someone with Debt

Atty. Aileen Amor - Bautista

Atty. Aileen Amor - Bautista

Last updated February 23, 2022

2020 has the lowest registered marriages—only 240,775—over the past 50 years, based on data from the Philippines Statistics Authority (PSA).[1] It declined by 44.3% compared to 2019, which could be due to the quarantine measures in the country. 

The COVID-19 pandemic has further brought financial concerns to marital problems in making ends meet. Marrying someone you love is a wonderful feeling, but what if that person has outstanding debts that their income and property are not sufficient to pay for the loans? Will you stick to the person, or will it be a deal-breaker in your relationship?

Does love transcend the exasperation over a spouse’s failure to handle finances? One might say that the vow made in front of the altar was “Until death do us part," and not "Until debt do us part."

Naturally, married couples have duties and commitments to each other. Marriage does not only concretize the bond of love but also connects the husband and wife to their property (debts or obligations) as governed by law. 

Marriage and Debt: What You Must Know If Your Spouse Has Debts

“When you get married, are you responsible for your spouse's debt?” If you want to know the answer, read on. This Ask Moneymax edition deals with the legal aspect of the property relations of Filipino married couples about debts. 

1. Is one spouse responsible for the debts of the other during the marriage?

is one spouse responsible for the debts of the other - marital issues

This question cannot be answered outright by a yes or a no. It is essential to determine the following factors:

  • Did the marriage occur before August 3, 1988?
  • Regardless of the marriage date, was there a marriage settlement (commonly known as prenuptial agreement or prenup) prior to the marriage?

Suppose the answer to both questions is “no.” In that case, under the Family Code of the Philippines, the property relationship of the spouses is the Absolute Community of Property (ACP),[2] which means that all property owned by the spouses separately at the time and during their marriage will become their property together and form part of the community property (except for personal items, property donated to a spouse during the marriage, and those acquired when the other spouse was previously married with a legitimate child). 

For example, let's say you own a condominium unit you are renting out even before you got married on July 31, 1992 (take note that the date is after August 3, 1988); and you did not sign any prenup, your spouse will also have a right to half of your condominium unit and the rental fees you are collecting because these constitute community property.

As to debts contracted during marriage under ACP, the community property or a spouse will not be liable if:

  • There was no consent given; or
  • It did not benefit the family.

If consent was given, or there was no consent but the debts benefited the family, the community property will be liable. So, suppose your partner obtained a loan, and you agreed to it. In that case, the community property will also be responsible for paying for the loans. 

If your spouse did not ask for your permission, but it was used to pay for the family expenses, such as children's tuition fees, rental payments of the house, and medical expenses, the community property is also liable to pay for the loans. 

Read more: Just Tied the Knot? 10 Tips to Find the Perfect House for Newlyweds

2. Why is August 3, 1988 important in knowing the property relations of a married couple?

is one spouse responsible for debts of other - marriage problems

This date is important because the Family Code took effect that day. Before the said date, the default property relation of husband and wife under the New Civil Code of the Philippines is Conjugal Partnership of Gains (CPG)[3] and not ACP. 

In CPG, the individual properties of the husband and wife before their marriage remain separate properties. Only the income, salary, or property they acquire during their marriage are owned by them as a couple and form part of their common fund. 

For example, if before you got married on May 9, 1986, you owned a condominium unit that you are renting out, that property will remain your exclusive property even if you're already married. Your spouse will not have a right to half of your condominium unit, but your spouse's right extends to the rental payments during your marriage. You can also mortgage your exclusive property without the consent of your spouse. 

Like ACP, the debts incurred during marriage under CPG would not make the other spouse liable if there was no consent or it did not benefit the family. If consent was given, or there was no consent but the debts benefited the family, the common fund will be liable. The CPG would automatically apply if the marriage occurred before August 3, 1988, and there was no prenup. 

3. What happens if my partner and I had a prenup?

is one spouse responsible for the debts of the other - prenuptial agreement

If there was a prenup, it would govern the property relations during the marriage, which could be any of the following:

  • ACP (if marriage was before August 3, 1988, ACP could only apply if there was a prenup because the automatic property relations during that time was CPG);
  • CPG (if marriage was on or after August 3, 1988, CPG could only apply if there was a prenup because the default property relations now is ACP);
  • Separation of property; or
  • Any other property relations. 

A common misconception about prenups is that it is only for couples where one is wealthy. However, it also protects a child born outside of wedlock by either spouse, as it ensures the child’s inheritance or financial security, depending on the language of the prenup.   

4. What is a separation of property? Can the parties still execute it if it turns out that one spouse is over-indebted?

A prenup can be signed and executed only before celebrating the marriage following the Family Code. It is stated in the marriage certificate and attached to it. A prenup does not bind third persons (creditors, mortgagees, etc.) if it is not registered in the civil registry and in the registry of deeds where the marriage was solemnized. 

A prenup for separation of property is a way to protect a future spouse’s property from the other’s debts (existing or future). However, this can only be done before the marriage. Once married, the parties can no longer execute a prenup even if it turns out that the other spouse is drowned in debt.

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5. What if the community property or common fund is not enough to pay for the loans?

Under the Family Code, both spouses will be liable to pay for the unpaid balance with their separate properties if the property relation is either ACP or CPG and the loans were obtained with the consent of the other spouse. This same applies even if there was no consent, but the debts benefited the family, and the community property or the common fund is not enough to pay for the loans.

Personal loan in the Philippines

6. If the loans were used for gambling, can payment be charged from the community property or common fund?

No. The Family Code states that whatever may be lost during the marriage in any game of chance, betting, sweepstakes, or any other kind of gambling, whether permitted or prohibited by law, shall only be borne by the losing spouse. But any winnings will form part of the community property or common fund. 

7. If both Filipinos were married abroad, do the ACP, CPG, and prenup also apply?

Yes. Under the New Civil Code, laws relating to family rights and duties or to persons' status, condition, and legal capacity are binding upon citizens of the Philippines. Even if Filipino citizens were married abroad, the Family Code (ACP, CPG, prenup, etc.) still applies.

8. Can divorce be filed on the ground of outstanding debts? 

is one spouse responsible for the debts of the other - marriage issues

No. The Philippines does not have a law on divorce. Only marriages celebrated under the Muslim rites allow for divorce. The Philippines and the Vatican are the only two sovereign states that prohibit divorce. 

There is no legal remedy in the country to dissolve valid marriages that later turned sour (money issues or otherwise). Therefore, to terminate a marriage, it has to be declared void from the beginning due to the psychological incapacity of either or both parties, which must be proven during a trial in court. Those that may be annulled are only voidable marriages according to specific grounds. Being over-indebted or having outstanding debts is not one of those grounds.

Final Thoughts

Along with building a family come expenses, so it’s important to keep track of the bills. Stop name-calling your spouse with a spendthrift, wasteful, or irresponsible because it could hurt your relationship in the long run. If your spouse has a different approach towards finances than yours, you may want to consider defining the parameters on when to save and spend. 

Like any relationship, communication is the key in marriage. It requires a lot of heavy lifting, yet thousands of Filipinos are getting married, with or without the pandemic. Hence, it’s important to know your property relations within the bounds of the law.

Email Us Your Questions!

Got questions about managing debt and loan payments? Email them to askmoneymax@moneymax.ph (with this subject line: Ask Moneymax), and we will try to address them in one of our next articles.

Editor’s note: This is part a series of articles helping Filipinos manage debt in the new normal. Stay tuned for more information and advice from the Ask Moneymax column!

Read other Ask Moneymax articles:

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Aileen worked in the public sector for 10 years and previously as a tax and corporate lawyer. In her recent stint, she was involved in implementing credit data submission of financial institutions in the Philippines, championing good credit history and responsible borrowing for consumers. She was a part-time faculty member for seven years, teaching business law subjects on credit transactions, corporate, and sales. Aileen is completing her master’s degree in International Economic Law at the Ateneo de Manila University. She is a consultant, lecturer, and advocate of financial literacy for Filipinos. Follow Aileen on LinkedIn.