Divorce and debts: How to share debt during divorce in California

| May 21, 2021 | divorce | 0 comments

In a divorce, most couples come up with plans on how to share the assets they have accumulated during the marriage but pay little, or no, attention to the debts. People rarely think about debt as something to be divided, mainly because it is never featured as prominently as “who gets to keep the house?” does.

However, since California is a community property state, a divorcing couple is obliged to share assets and debts that are legally incurred while married. Even if only one partner took a mortgage with their name, both partners are equally responsible for associated debt during the marriage as well as after divorce. So, how is debt shared during divorce in the Golden State?

Understanding the division of property and debts in California

California is a “community property” state. Generally, this means that both assets and debts incurred by either party during the marriage equally belong to both parties.

Therefore, unless the parties entered into some sort of prenuptial agreement with respect to the division of assets and debts, a court will direct them to divide the community property and debts in question equally. However, an exception to this equal division rule may arise when the value of joint debt far exceeds the value of joint assets. In such cases, California laws allow the court to direct an unequal division of the debts by allocating excess debts to the party who is in a better financial situation to settle them.

Defining debts: community vs. separate debts

When it comes to debt division, the first task the divorce court has to undertake is characterizing the debt — that is, whether it is a “community” or “separate” debt.

A community debt, as the name indicates, refers to any debt incurred after the onset of marriage, and before the date of separation. Any debt incurred during the marriage equally belongs to both parties, even if only one party incurred it.

A separate debt, on the other hand, is any debt incurred before the commencement of the marriage or after separation. A separate debt belongs to the party that incurred it.

Your partner will not agree to share debts fairly?

Just like in a contested divorce, you have the option to engage a divorce lawyer in California when deciding on how to divide debts and assets. Nip it in the bud and you will be on your way to managing your post-divorce debts much more comfortably if you both agree to the terms.