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How is debt addressed as part of a divorce?

On Behalf of | Jun 29, 2023 | Divorce, Family Law, Property Division

Knowing who will get to keep the marital home, automobiles, bank accounts, retirement accounts, items of sentimental value and more can be prime topics for disputes in any California divorce.

Debt can also be a touchy subject.

Just as there are laws in place dictating how property is divided, there are laws regarding debt.

Know the facts about marital debt in a divorce

Since California is a community property state, property acquired during the marriage is considered to be jointly owned by the spouses. In theory at least, this means it is split in half as part of the divorce.

Property that is commingled can be more complex, so courts strive to achieve fairness based on the circumstances. One factor that it considered is each spouse’s ability to pay any debts.

For debt acquired after a couple has separated but prior to the divorce, courts determine whether it was for necessities of either spouse and their children. Debt for items that were not necessities will need to be paid by the party who purchased them.

The court can also order reimbursement for debts paid after the couple separated, but prior to the trial.

Debt should not be ignored as part of a divorce

Debt can be a topic of discord in a marriage and divorce. In some cases, one spouse might overspend on a joint credit card or expend assets. In other cases, debts arise from the expenses of separation.

When dealing with debt or other issues in divorce, it is useful to be fully prepared. Gathering receipts, proving who purchased what and why is key.