Splitting debt in divorce

On Behalf of | Feb 1, 2021 | blog, divorce | 0 comments

If you are going through a divorce, you might be concerned about how your assets will be divided. However, it is also important to consider how your debt will be divided. Since California is a community property state, the court may decide that debt acquired after marriage should be split equally just as property is supposed to be, but there are often additional complications.

Complications in dividing debt

One of those complications is that while your divorce decree may say that your ex-spouse is supposed to pay half of a shared debt, creditors are generally concerned only with whose name is on the obligation. This means that if your spouse agrees to pay a debt that is in your name or both your names and does not do so, the creditor may pursue you instead. An additional difficulty is that it can be hard to compel an ex-spouse to pay a debt.

Types of debt

Shared debts will be handled in different ways. For example, if you have a mortgage, you may want to sell the home and split the proceeds. If your ex-spouse accumulated medical debt, you might still be required to pay a portion of it. This could also be the case for credit card debt. If you share an auto loan, the best approach might be to refinance the debt under just one party’s name. If you both brought student loan debt into the marriage, this might be considered individual debt.

The ideal solution would be to pay off debt before filing for divorce, but this is not always feasible. Another potential solution that combines property and debt division might be for one person to take on more debt as well as more assets to make up for that.