Debts and Creditors: Prenups vs. Divorce Decrees

In Schlaefer, the husband and wife had entered into a prenuptial agreement which addressed  property division and debt division.  It provided, among other things, that any debts of the wife incurred prior to or during marriage would be her sole responsibility and her separate debt, unless the debt was signed by both spouses. During the marriage, the wife incurred a debt for medical care at a local hospital. The husband did not sign any of the paperwork regarding the wife's medical care, nor did he ever sign any agreement for payment. After they divorced, the hospital sought to collect the debt from him anyway. The husband argued that the prenuptial agreement prevented the hospital from collecting the debt from him; since he didn't't sign it, it is the wife's sole responsibility. The hospital argued that the prenuptial agreement did not matter, because the hospital was not a party to it; the hospital argued that the prenuptial agreement controlled the rights and obligations of the spouses with respect to one another, but that it had no effect on third parties.

The Court of Appeals agreed with the husband. The Court said a prenuptial agreement is valid unless the spouse who is contesting it shows that it was either involuntary, or that it was both unconscionable and that the contesting spouse had lacked both actual and constructive notice of the assets of the other. That was not the case here.  Even though the hospital didn't know about the prenup, all they had to do was insist that both spouses sign, and they would have been protected.

So what made the hospital think that the prenup didn't matter?  As it happens, third-party creditors are not bound by the allocation of community debts in a divorce decree.  Community Guardian Bank v. Hamlin, 182 Ariz. 627, 898 P.2d 1005 (App.1995).  In other words, a divorce decree will typically say that the husband is responsible for paying certain community debts, and the wife is responsible for paying others.  The creditor, however, can collect from either or both, regardless (so if your spouse doesn't pay as the court directs, you are still on the hook). 

But the Schlaefer Court said that a prenup is different.  In a divorce decree, the debt was a community debt when it was incurred--and therefore the creditor originally had a right to collect from both spouses, which cannot be cut off.  In a prenup such as the one in Schlaefer, the debt was never a community debt; consequently, the creditor never had a right to collect from both spouses, and such a right cannot be created out of thin air.  See Elia v. Pifer, 194 Ariz. 74, 83, ¶ 44, 977 P.2d 796, 805 (App.1998), for a similar result when the debt is a personal injury liability claim rather than a contract.