Perspective | A Study on the Identification Standards and Repayment Rules of Joint Marital Debts (Part 1)

Joint debts of a married couple refer to debts incurred by both spouses with a common intention during their marriage, or debts incurred by one spouse in their own name for the needs of daily family life. Such debts must be repaid jointly by both spouses, who bear joint and several liability for them. In other words, the creditor has the right to demand repayment of the entire debt from either or both spouses; even if the couple has divided their property or divorced afterward, the liability for repayment of the debt is generally not affected. Joint debts of a married couple are usually intended to meet the needs of common family life and joint production and operation, and are closely related to the common interests of both spouses, which is one of its important characteristics. In contrast to joint debts of a married couple are personal debts of spouses, which refer to debts incurred by one spouse in their own name and not used for the common interests of the family, and are only repaid by the indebted spouse, without the need for repayment by the other spouse.

In terms of legal nature, joint debts of a married couple are considered joint debts, and externally manifest as joint and several debts. This means that the creditor can claim repayment of the entire debt from either spouse, and both spouses bear an indivisible liability for repayment. Internally, joint debts of a married couple should usually be repaid with the couple's joint property; if the joint property is insufficient for repayment, both spouses have the obligation to share the remaining debt in a certain proportion (this can be decided by the court or agreed upon by both parties during a divorce). However, it should be noted that regardless of how the spouses agree on the internal allocation of property or whether they are divorced, as long as the debt is deemed a joint debt of a married couple, it still needs to be repaid jointly when opposing the creditor's rights of a bona fide third party.

The direct legal basis for determining joint debts of a married couple is Article 1064 of the Civil Code of the People's Republic of China, which establishes the scope and criteria for judging joint debts of a married couple: debts incurred with a common intention, such as joint signatures by both spouses or subsequent ratification by one spouse, and debts incurred by one spouse in their own name for the needs of daily family life during the marriage, are considered joint debts of a married couple. Debts incurred by one spouse in their own name exceeding the needs of daily family life during the marriage are not considered joint debts of a married couple; however, this excludes situations where the creditor can prove that the debt was used for the couple's joint life, joint production and operation, or based on a common intention of both spouses.

Accordingly, joint debts of a married couple can be legally divided into two categories: the first is debt incurred with a common intention, including debts jointly signed by both spouses or confirmed in other forms such as subsequent ratification. This reflects the principle of "joint debt, joint signature," meaning that if both spouses have a common intention regarding the debt, the debt should be considered a joint debt of a married couple. The second is debt incurred for daily family life needs, referring to debts incurred by one spouse in their own name during the marriage for necessary expenses for daily family life, such as purchasing daily necessities, paying for children's education, and daily medical expenses. As long as it meets the needs of daily family life, it is considered a joint debt of a married couple even if it is not agreed upon by the spouse. This actually recognizes the statutory power of attorney for daily family affairs, that is, the debts incurred by one spouse in daily family affairs for the benefit of the family can directly bind the other spouse.

At the same time, the law also clearly defines the negative situations: debts incurred by one spouse in their own name that exceed the needs of daily family life are generally not considered joint debts of a married couple. Such debts usually refer to debts of a large amount or for purposes beyond the scope of daily life, such as high personal investments or luxury consumption unrelated to the family. If the creditor claims that such debts are joint debts of a married couple, they must provide evidence to prove that the debt funds were indeed used for the couple's joint life, joint production and operation, or that the debt was based on a common intention of both spouses. In other words, in the case of large debts exceeding the needs of daily life, the creditor is required to bear the burden of proof. Only when the creditor can prove that the debt was used for the common interests of the couple or that both spouses jointly agreed on the debt can it be considered a joint debt of a married couple; otherwise, it should be considered a personal debt of one spouse.

Although the Civil Code and related judicial interpretations have clearly defined the criteria for determining and settling joint debts of a married couple, there are still some disputes and difficulties in specific judicial practice regarding the standards for determining and settling such debts. When trying relevant cases, judges will combine evidence and the principle of fairness to grasp the specific scale of judgment within the legal framework. The following will explore the main points of contention and the corresponding rules of judgment in judicial practice.

The principle of "joint debt, joint signature" is one of the current bases for determining joint debts of a married couple, meaning that "joint debt should have joint signatures or a common intention." This principle requires that for large debts exceeding daily living expenses, it is best for both spouses to jointly sign a promissory note or contract, or for the other party to subsequently ratify it in writing, to clarify both parties' agreement on this debt. The establishment of this principle can prevent, from the outset, the situation where one party borrows money without the other party's knowledge, causing the spouse to be "passively indebted." The rule of "joint debt, joint signature" can effectively reduce the possibility of abuse of debts being presumed as joint debts, protecting the uninvolved spouse's right to know while also safeguarding the legitimate rights and interests of creditors.

In practice, the application of the principle of "joint debt, joint signature" mainly lies in: if one spouse wants the other spouse to also bear the responsibility for the debt, they should try to obtain the other spouse's explicit consent and keep relevant evidence. The Supreme Court's Civil Division I's view on this is: when debt is formed (especially large debts), creditors should be guided to request both spouses to sign jointly, to reduce disputes from the outset. This guidance has also become a factor considered by many judges when making judgments. If the creditor knowingly knows that the debt amount is large but only signs with one spouse and fails to provide any proof of the other spouse's consent, then when a dispute arises, the court will tend to determine that the debt is not a joint debt of the married couple, unless the creditor can provide counter-evidence to prove that the other spouse was aware of and agreed to the debt.

It is important to note that the principle of "joint debt, joint signature" does not equate to the requirement that the agreement on marital joint debt must be reflected in the same document. In addition to both spouses jointly signing IOUs or contracts, judicial practice also recognizes other forms of joint expression of intent, such as one spouse promising in writing to repay the debt jointly after the other spouse borrows money, or a spouse issuing a statement agreeing to assume the debt afterwards. These can all be considered confirmations of the debt, thereby satisfying the requirement of agreement for marital joint debt. In a case published by a court in Beijing, after the wife borrowed money unilaterally, the husband promised in writing to "repay the debt jointly". The court based on this determined that both parties had a joint expression of intent regarding the debt, and ruled, according to the principle of "joint debt, joint signature", that both husband and wife should jointly repay the debt. This shows that as long as it can be proven that the couple reached a joint understanding and agreement on the debt, even if they did not jointly sign in form, the court may still find that there is "joint debt, joint signature".

Of course, the principle of "joint debt, joint signature" mainly applies to large debts exceeding the needs of daily life. For smaller debts used for daily life, the law itself directly stipulates them as marital joint debts, and in such cases, prior consent and signature from the spouse is not required. However, in the area of large debts, adhering to "joint debt, joint signature" both guarantees transaction security and protects the interests of the weaker party in the marriage. Overall, the judicial practice of this principle is quite firm, but there is still some room for debate in proving the couple's "joint expression of intent". For example, whether certain actions of one spouse after the fact can be regarded as tacit confirmation of the debt may be understood differently by courts in different places. If the non-borrowing spouse has actively repaid part of the debt or paid interest, some courts infer from this that they acknowledge the debt (considered tacit agreement or subsequent confirmation), and thus determine the debt as a joint debt; however, some believe that this kind of inference should be treated cautiously, to prevent misinterpreting "passive repayment" as "active acknowledgement of debt".

Daily household management agency is a right and obligation granted to both spouses under civil law, that is, one spouse has the right to enter into contracts and incur debts externally for the purpose of family interests in daily family life, and this act is legally considered implied authorization by the other party, and the other spouse should be bound by the results of this act. Article 1060 of the "Civil Code of the People's Republic of China" establishes that spouses have the obligation to mutually assist and cooperate during the subsistence of the marriage relationship, which provides an institutional basis for daily household management agency. Article 1064 further includes "debts incurred for the needs of daily family life" directly into the category of joint marital debts. This means that for debts arising from daily household expenses, the creditor does not need to prove the consent of the other spouse or the specific use of the funds; as long as the debt is indeed used for daily living needs, the law presumes that both spouses have an obligation to repay.

In judicial practice, there is some debate surrounding the definition of "needs of daily family life." Generally speaking, daily living needs include basic living expenses such as food, clothing, housing, and transportation, as well as family expenses such as raising children and supporting the elderly. Such debts are usually relatively small in amount and have the characteristics of regularity and continuity, making them easy to judge. However, in some cases, even if the debt amount is large but is used for important matters of family life, such as house purchase funds or significant medical expenses, it can also be considered part of family living needs. Different courts may have different understanding standards for this. Some courts tend to judge based on the direct purpose of the debt: if the loan is directly used for family living consumption, children's education, etc., then regardless of the amount, it can be considered as used for the common life of the family. There is also a view that advocates using the joint benefit of the couple as the standard: that is, whether the funds obtained from the debt benefit both spouses or the family as a whole, whether directly or indirectly, as long as the couple benefits jointly from it, it can be considered as belonging to the needs of common life. This view is more prevalent in academia and advocates expanding the scope of the joint benefit of the couple to the entire family's interests, including potential indirect benefits.

For judicial practice, in most cases the scope of daily living needs is clear. For example, daily consumer credit, small-amount shopping debts, etc., will be considered joint marital debts. However, in some special cases, the court needs to make a comprehensive judgment based on the local living standards, family economic conditions, and the purpose of the debt. For example, in first-tier cities, debts incurred for house renovation to improve living conditions, although the total amount may be high, considering that the renovation directly serves the family's common life, the court can still consider it a joint marital debt. For example, one spouse borrowing money for the down payment of the family's only residence, although the amount is large, the house as joint marital property clearly benefits both parties, and such debts are usually also considered joint marital debts (the creditor can prove that the funds were used for housing and other common living purposes). Conversely, if the debt is used for luxury consumption that clearly exceeds the needs of ordinary life, such as buying high-end luxury goods far beyond the family's economic capacity, or huge amounts of money given to online streamers, most courts will determine that the debt is beyond the reasonable scope of daily needs, and tend to regard it as the personal consumer debt of one party, and not consider it as a joint marital debt.

In the application of daily household management agency power, there is also a special situation, that is, although the form of debt belongs to daily consumption, disputes arise due to the accumulation of large amounts. For example, one spouse satisfies daily family expenses through multiple small loans, but the accumulated total reaches a considerable level, exceeding the scope of general family daily needs. The determination of the nature of the debt may lead to differences of opinion: one opinion is that since each debt is essentially for daily needs, even if the total amount is high, it should still be considered as a whole joint marital debt; another opinion is that a comprehensive consideration should be made. If the accumulated debt has far exceeded the scale of normal family expenses, part of the debt may not be truly needed for daily life. In practice, most courts judge based on the frequency and purpose of borrowing: if the debtor frequently borrows from the same creditor and the accumulated amount is huge, and the specific purpose cannot be reasonably explained, the court will be more cautious and may require the creditor to further prove the destination of the funds to determine whether they were all used for family needs. For example, examining whether there is frequent financial transactions between one spouse and the creditor, if the transactions are frequent and the amount is huge, it is presumed that the other spouse should be aware of the occurrence of the debt, thus tending to consider it as a joint debt; conversely, if the debt occurs suddenly and the amount is abnormal, and is clearly inconsistent with the daily life pattern, it may be considered as personal debt exceeding daily needs.

The allocation of the burden of proof is arguably the most critical issue in marital debt disputes. Before the implementation of the Civil Code, the non-borrowing spouse needed to prove that the debt was not used for joint living to prove their innocence, which was very difficult in practice. After the implementation of the Civil Code, the burden of proof has been relatively clearly divided: for situations exceeding the needs of daily life and debts incurred only in the name of one party, the creditor bears the main burden of proof and needs to prove that the debt funds were used for the couple's joint life, business, or that it was a debt jointly agreed upon by both parties. This change has played a positive role in protecting innocent spouses, but it has also increased the difficulty of creditors in realizing their claims and increased the burden on creditors.

In judicial practice, creditors often present various pieces of evidence and arguments to prove that a debt is a joint debt of a married couple. Examples include proof of fund flow (such as loans directly transferred to a joint account or used to purchase jointly owned property), evidence of spousal knowledge or authorization (such as chat logs showing the spouse's knowledge or consent to the loan), and the context of the debt (such as debt used to pay a down payment on a family home, invest in a family business, etc.). In some cases, the creditor can also provide direct evidence such as a promissory note or guarantee signed by both spouses, or audio-visual recordings of the spouse subsequently acknowledging the debt. With such evidence, the court is more likely to determine that the debt meets the requirements of a joint debt.

Conversely, the non-borrowing spouse (often the one who is claimed to jointly bear the debt in divorce cases) will provide counter-evidence to show that the debt is the personal debt of their spouse. For example, proving that the loan actually went into their spouse's personal account and was used for personal expenses, or proving that the creditor and debtor have a special relationship and that the transaction is unreasonable, thus questioning the authenticity of the debt or the legitimacy of its use. In extreme cases, if one spouse can prove that the debtor and creditor colluded maliciously, fabricating the debt to transfer property or harm their interests, the court will, based on the Supreme Court's judicial interpretation, explicitly refuse to support this false claim. Furthermore, if it can be proven that the debtor used the loan for illegal activities such as gambling, this can be used to argue that the debt should not be jointly borne by the spouse, because laws and judicial interpretations exclude the joint responsibility for repaying this type of debt.

Although Article 1064 of the "Civil Code of the People's Republic of China" and related judicial interpretations have clearly defined the burden of proof, there are still many problems in the specific operation of judicial practice. On the one hand, the difficulty for creditors in providing evidence objectively exists. As an external third party, creditors often find it difficult to fully understand the debtor's internal family affairs and the true use of funds. Especially when the debtor maliciously conceals the whereabouts of funds or mixes them with household expenses, it is very difficult for the creditor to collect evidence. On the other hand, if the non-borrowing spouse is completely unaware of their spouse's borrowing behavior, proving this is also difficult—because "unawareness" itself is difficult to prove directly; it can only be supported indirectly through counter-evidence (for example, proving that the loan was not used for the family). When both parties find it difficult to provide sufficient evidence, the allocation and application of the burden of proof becomes very important. If the truth is difficult to ascertain, judges need to rely on legal presumptions and rules of experience to make judgments, such as making a presumption that is unfavorable to the creditor or debtor based on the provisions of Article 1064 of the Civil Code. This requires judges to accurately understand the legislative intent and strike a balance between protecting innocent spouses and preventing fraudulent debts.

Currently, the understanding of certain evidentiary standards and presumption rules among courts across various regions is not yet fully unified, and cases with identical facts but different judgments are not uncommon. For example, when the purpose of a loan is difficult to ascertain, some courts may be more inclined to uphold transaction security and presume the debt to be a joint debt, while others may be more inclined to protect the spouse and determine it to be a personal debt. Overall, the approach of most cases is still very clear: if there is insufficient evidence to prove that it is a joint debt, it is better to wrongly judge it as a personal debt rather than easily making the unknowing spouse pay. This tendency is consistent with the spirit of the legislation and reflects the preferential protection of the spouse's legitimate rights and interests. Of course, this also encourages creditors to be more cautious in transactions to avoid being trapped in the predicament of the burden of proof later.

In addition to the above main issues, there are some special types of debt determination that are controversial in judicial practice and need to be analyzed on a case-by-case basis:

(1) Debt involving one party providing gratuitous guarantees for a third party

If one spouse, without the consent of the other, provides a guarantee for the debt of another person (for example, acting as a guarantor in a friend's loan), and this guarantee has no direct benefit to the family, if the guarantor fulfills the guaranteed debt, is it considered a joint debt of the married couple? Generally, courts tend to determine that such debt is not a joint debt of the married couple, because providing a gratuitous guarantee is not based on the common interests of the family and is a personal risk of the guarantor. Unless there is evidence showing that the other party knows about and agrees to provide the guarantee (such as the couple jointly signing a guarantee contract), the creditor cannot claim repayment from the spouse.

(2) Debt incurred for the benefit of children from a previous marriage

One spouse may bear significant expenses for their child from a previous marriage, such as buying a house or car. If this debt has not been agreed to by the current spouse, and the beneficiary is clearly only one spouse or their child from a previous marriage, courts often determine this to be the personal obligation of that spouse to the previous family, and the current spouse should not jointly bear it. Such debts are usually considered the personal debt of the debtor.

(3) Debt incurred in violation of marital fidelity obligations

If the debtor incurs debt to meet personal improper purposes, such as squandering money on an extramarital affair, paying for prostitution, or other illegal or immoral acts, such debt is usually not considered a joint debt of the married couple. Firstly, these acts do not belong to the scope of the couple's common life, and secondly, considering the principle of public order and good customs in civil law, the court will not support the transfer of debt responsibility to the innocent spouse due to illegal or immoral acts. For example, in some cases, the husband incurred a large debt to support his mistress, and the wife refused to acknowledge that the debt was a joint debt; the court usually adopts the wife's opinion, determining that the debt is the husband's personal debt and should not be borne by the wife.

(4) Debt incurred by one spouse operating a company

Debt incurred by one spouse operating a company is a more complex situation in judicial practice. If one spouse engages in business activities that result in debt, it is necessary to distinguish whether the business activity is jointly operated by the couple and whether the other spouse benefits from or participates in decision-making. If the business income is included in the couple's joint property or the other spouse actually participates in the management, the debt tends to be determined as a joint debt (considered as a need for joint production and operation); conversely, if the business activity is entirely carried out independently by one party, the income is not shared with the family, and the other party is unaware or even explicitly opposes the risky investment, then the debt may be determined as a personal debt. In a case published by the Yantai Intermediate Court, the husband secretly took out large loans from the outside to invest in a business, and the creditor demanded joint repayment from the couple. As evidence showed that the wife was neither a shareholder in the company nor involved in management decisions, and the investment income was not reflected in an increase in family assets, the court ultimately determined that the relevant debt was beyond the scope of the family's joint operation and belonged to the husband's personal debt. It can be seen that courts usually make comprehensive judgments from aspects such as the form of joint operation (such as jointly opening a shop, partnerships, etc.), the degree of spousal participation, and the sharing of income.

In summary, the handling of disputes concerning debts in special forms will still revolve around the core standard of "whether it is for the common interests of the married couple." For debts that clearly were not used for the couple's common life, joint operation, and without the other party's consent, the courts tend to determine them as the personal debt of one spouse; conversely, as long as it can be determined that the debt is related to the family's interests or the spouse has approved it, it may be included in the scope of joint debt.