Divorcing your spouse or partner can be easier than divorcing your debt.
Because California is a community property state, you may think dividing the marital debt is fairly straightforward – and for the most part, it is. There are situations, though, when dividing it is not so easy.
A Quick Overview of What a Community State Means
Basically, a community state means that anything of value (assets and debts) that is acquired during a marriage – but before the date of separation – belongs to both parties.
An asset or debt owned by one person before the marriage will typically remain with them. That’s considered separate property and is usually not subject to division by the court.
In most cases, the court will do their best to divide assets and debts as evenly as possible.
For example, one person may be given more property if they are taking on more of the debt responsibilities.
The date of separation is an important one to remember. Any debts racked up after a couple physically separates will be the responsibility of the person who incurred them. Likewise, any money or asset they acquire after the date of separation belongs solely to them.
How is the Date of Separation Determined?
There is a two-step process of putting a firm date on when a couple separated.
- The date one of the parties physically moves out of the family home.
- The date an intent to end the marriage was shown by one of the parties.
What Happens if We Have Joint Credit Cards?
This is an area where things can get tricky. Even if you and your soon-to-be ex have an agreement in place outlining who will be responsible for paying off a particular credit card debt, the credit card company doesn’t have to play ball.
They just want to be paid.
As long as your name is on the account, you could be on the hook for payment.
A good way to avoid this is to have the accounts transferred solely to the person who has been ordered to pay them.
What About the Mortgage?
Usually, the home will be sold in order to pay off the mortgage. Any proceeds left over will be divided between the two parties.
If, however, one of the parties wants to keep the home, they may have to “buy out” the other person and accept less community property.
How to Preserve Your Credit
By being proactive, you can greatly limit much of the financial pain of divorce. Here are a few steps you can take.
- Close all joint accounts. If your spouse or partner is on your account, have them removed now. Don’t wait until after the divorce process is finished.
- Pay off as much debt as you can or have the debts transferred to the person who has either agreed to or been ordered to pay them. If your name still appears on a joint account and the other party fails to come through with a payment or even files for bankruptcy, the creditors will most likely come after you.
A good way to protect yourself is to file documentation about joint accounts with the court early in the process. Be sure to include the amount owed.
If possible, talk with your spouse or partner about an agreed-upon date for which joint debt is transferred to new individual accounts.
For more information about your divorce options, call the Men’s Legal Center.
If you do not have a firm handle on how California divorce law treats marital debt, you may be facing a huge risk of not getting a fair shake in the process.
A skilled divorce attorney can be vital in making sure all debts and assets are divided appropriately and fairly.
For a free phone conversation, call the Men’s Legal Center at 619-234-3838. You can also reach us via email.