A creditor who has won a case often meets the same situation. The debtor has nothing in their own name, but the house is in the wife's name, the car is in the husband's name, or there is a guarantor with assets. The question is how far the creditor can reach those assets. The answer depends on who owns the asset and whose debt it is.
Marital property and personal property
Personal property is property each spouse had before the marriage, property acquired during the marriage by inheritance or by gift without consideration, and reasonable personal items.
Marital property is all other property acquired during the marriage, such as a house, a car, or money earned or used to buy things during the marriage, regardless of whose name it is in.
The name on the title document therefore does not decide everything. A house in the wife's name that was bought during the marriage is usually marital property.
Personal debts: marital property can be seized, but the spouse can carve out a share
If the debt belongs to one spouse only, the creditor can enforce against
- the debtor's personal property
- marital property, which the creditor can seize and sell as a whole, but the spouse who is not the debtor has the right to apply to have their own share carved out of the sale proceeds
What the creditor cannot seize is the personal property of the spouse who is not the debtor.
In practice, a creditor who seizes a house that is marital property is paid only from the debtor's share. After the spouse's share and any mortgage are deducted, what remains may not justify the cost of enforcement, so work this out before seizing.
Joint debts: the spouse must be sued too
Some debts are treated as debts for which the spouses are joint debtors, such as debts incurred to run the household or reasonably support the family, debts relating to marital property, debts from work done together, or debts that one spouse incurred for their own benefit alone but the other spouse ratified.
If the debt is a joint debt, the creditor must also sue the other spouse and obtain a judgment holding that spouse liable before enforcing against that spouse's personal property. A creditor who sues only one spouse when the debt is a joint debt may lose this opportunity. It is therefore important to check, before filing suit, whether the debt qualifies as a joint debt.
Guarantors: liable when the debtor defaults, but with rights to defend
A guarantor is liable when the debtor defaults, up to the amount of the debtor's debt and not beyond the limit the guarantor agreed to. What creditors need to know is that guarantors have several rights that can slow enforcement or reduce what is recovered.
- The creditor must notify the guarantor within the prescribed period after the debtor defaults. If the creditor does not, the guarantor may be released from interest and damages arising after that period.
- The guarantor may ask that enforcement be made against the debtor first, if the guarantor can prove that the debtor has the means to pay and that enforcement is not difficult.
- The guarantor may ask that enforcement be made against the secured assets first, if the debt is secured by a mortgage or pledge.
- An agreement that the guarantor is liable as a joint debtor is currently of limited use, especially for guarantors who are natural persons.
To enforce against the guarantor's assets, the guarantor must be sued in the case and a judgment holding the guarantor liable must be obtained. A judgment against the debtor alone cannot be enforced against the guarantor's assets.
If you are on the guarantor's side, read the guarantor's perspective in the risks of guaranteeing someone else's loan.
Summary for creditors
- Check whether the assets you can see are marital property or personal property, and whose they are.
- Check whether the debt is a personal debt or a joint debt. If it is a joint debt, sue the spouse from the start.
- If there is a guarantor, give notice within the deadline and bring the guarantor into the case.
- Before deciding to seize, calculate what you will actually receive after deducting the spouse's share and any mortgage.
📌 See more: Asset tracing and enforcement · Won the case but the debtor will not pay: enforcement must be done within 10 years
If your debtor has nothing in their own name but their family or guarantor does, consult our lawyers. We will help assess which assets can be enforced against and whom you need to sue.
This article is general information and is not legal advice for any specific case.
