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Debt is also divided during a California divorce

Debt is also divided during a California divorce

| Nov 16, 2020 | Divorce

Most people are familiar with the terms “asset division” and “property division,” both being interchangeable terms for the same concept. But a more accurate term would be “division of assets and debts,” because property division also includes division of marital debts.

Just as debt can create a rift in marriages, it can also be a major source of contention during divorce if it wasn’t incurred by both spouses knowingly and in roughly equal measure. You may be wondering: how is debt divided, and can it ever be given to just one spouse?

Community property and shared debt

California is one of just nine states to follow the community property model for asset and debt division. Under this legal theory, property/assets and debts acquired by either party during the marriage are considered community property and jointly owned by both spouses (with few exceptions). This model has some advantages, but it can also be problematic when it comes to dividing debt. In a community property state, one spouse could get a credit card in his own name and rack up several thousand dollars in debt and his spouse may be left equally responsible for paying it off.

There are some notable debt exceptions. The other spouse would typically not be held liable for the other spouse’s:

  • Significant gambling debts
  • Lavish spending that took place after separation or after divorce papers were filed
  • Debt incurred to fund an extramarital affair

Discuss details early in the process

During the discovery process of the divorce, each spouse needs to disclose their assets and liabilities (debts). If certain debts should only be assigned to one spouse, it is important to communicate this to your attorney. He or she can then factor this in when negotiating a property settlement or proposing one to a judge. While success can never be guaranteed, most judges try to be fair and reasonable about unique circumstances and behaviors. Above all, you need a lawyer who is willing to advocate aggressively for your interests and communicate your side of the debt story clearly.