China’s Supreme People’s Court just redefined what a marital debt is. Now, Chinese spouses will no longer be on the hook for unreasonable marital debts during the marriage as part of a divorce settlement.
The Supreme People’s Court, in a revision to Article 24, said that debts will be considered marital liabilities only if both partners sign the original paperwork, or if a non-signatory later approves the borrowing.
The change does not apply to spending or borrowing considered reasonable in a marriage, such as payments made for shelter or food, the court said.
Speaking at a press conference, Supreme Court judge Cheng Xinwen said the update to the article was intended to reflect a changing society.
It was considered necessary in view of the rising number of cases of people finding themselves in financial difficulty because of their spouses’ clandestine borrowing, he said.
Florida Property Division
I’ve written about property division in Florida many times before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.
Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties. In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal.
However, if there is a justification for an unequal distribution, the court must base the unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.
Additionally, courts can consider the contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.
China’s Distribution Solution
The previous version of the Chinese law stated that all debts incurred in a marriage were the joint liability of both partners.
Many people in China are in favor of the new law because of the values behind it.
I see no point in drafting an article to protect a creditor’s interests, as a person who’s able to lend money is always in the dominant position and capable of demanding that both spouses sign the paperwork before lending them money.
There were cases where husbands had sought to cheat their partners by concocting fake loan agreements in collaboration with dubious associates who would then demand repayment from the unsuspecting and legally defenseless wife.
Judge Cheng said that the law was introduced to help maintain market order – and creditors only as a consequence – at a time when there was a growing number of cases of couples trying to evade their debts by faking a divorce.
The South China Morning Post article is here.