Court: It's Not a Community Debt of Spouses for It Exceeds the Needs of Everyday Life of FamilyRecently, the Baoshan District People's Court of Shanghai (hereinafter referred to as the "Shanghai Baoshan Court") heard a case of private lending dispute. The court determined that the debt was not a community debt of spouses and ruled that only one spouse should bear the responsibility for repayment.

[Case Review]

From May 2018 to July 2019, Li borrowed a total of 1.46 million yuan from his fellow-townsman Wang five times. Li was unable to return Wang's money after a long time. Wang urged Li to repay the debt several times. After hearing that Li and his wife were divorcing, Wang filed a lawsuit with the Shanghai Baoshan Court in February 2020, requesting Li and his wife to repay the debt as soon as possible.

During the trial, the defendant Li claimed that it was true that there was a debt of 1.46 million yuan between him and the plaintiff. The money was mainly used for household expenses and repayment of mortgage, and he agreed to jointly repay the debt with his wife.

But Li's wife did not agree with this statement. Li's wife argued that she was unaware of the debt or where the money was spent. She did not sign any of the IOUs, had never met with the plaintiff Wang, and had no contact with the plaintiff. Therefore, she refused to recognize the money as a community debt of spouses, and did not agree to repay the debt with the defendant Li.

[Case Study]

After trial, the Shanghai Baoshan Court held that the IOUs provided by the plaintiff Wang, the bank transaction detailed list and the defendant Li's admission can confirm the fact that the debt did occur. Therefore, the plaintiff's claim that the defendant Li should return the 1.46 million yuan was legal and well-founded.

Regarding whether the debt can be recognized as a community debt of spouses, in this case, the IOUs of the debt were only signed by the defendant Li, and Li's wife refused to endorse them afterwards. Li borrowed a huge amount that exceeded the daily needs of a family. Both the plaintiff Wang and the defendant Li failed to provide evidence to prove that the huge amount of borrowing was used to meet the joint needs of life of the couple.

After investigation, the divorce case of the defendant Li and his wife was currently under litigation.

According to the relevant content of the judicial interpretation of the Supreme People's Court, where one spouse incurs a debt in his or her own name during marriage beyond the needs of everyday life of his or her family, if the creditor files any claim on the grounds that it is a community debt of husband and wife, the court shall not support the claim, unless the creditor is able to prove that the debt is used to meet the joint needs of life or production or operation of husband and wife or based on their common declaration of will. Based on the facts of the case and considering the burden of proof and the authenticity of the debt, the court believed that the debt should not be recognized as a community debt of Li and his wife. Therefore, the plaintiff Wang's request for the defendant Li's wife to repay the debt together with Li was not supported by the court.

Accordingly, the Shanghai Baoshan Court ruled that the defendant Li shall repay the debt of 1.46 million yuan to Wang, and dismissed other claims of the plaintiff Wang.

[Relevant Laws]

1.     Contract Law of the People's Republic of China

Article 206 The borrower shall repay the principal at the agreed time. Where the time of repayment is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this Law, the borrower may repay at any time; and the lender may demand repayment from the borrower within a reasonable time limit.

2.     Interpretation of the Supreme People's Court on Issues concerning the Application of Law in the Trial of Cases Involving Marital Debt Disputes

Article 1 Debts incurred by a common declaration of will such as the joint signatures of husband and wife or the subsequent ratification by the other spouse shall be determined as a community debt of husband and wife.

Article 2 Where one spouse incurs a debt in his or her own name during marriage to meet the needs of everyday life of his or her family, if the creditor files any claim on the ground that it is a community debt of husband and wife, the court shall support the claim.

Article 3 Where one spouse incurs a debt in his or her own name during marriage beyond the needs of everyday life of his or her family, if the creditor files any claim on the ground that it is a community debt of husband and wife, the court shall not support the claim, unless the creditor is able to prove that the debt is used to meet the joint needs of life or production or operation of husband and wife or based on their common declaration of will.

(Writer: Hu Mingdong of Shanghai Baoshan Court)