How is Debt Divided in a California Divorce?

Posted By Taub & Taub, P.C. || 9-Dec-2016

Community property division might understandably be the focus of your divorce proceedings in California, especially if you don't share any children or dependents with your ex-spouse. But while deciding who gets to keep what is important, you must also realize that who pays what debts is just as crucial, if not more so. Without proper planning, debt division in divorce can become a nightmare, and potentially accrue even more debt on top of itself.

Debt Division Rules in California

Debt division will be treated and regulated in much the same way as property in a California divorce. Community property rules make it so the court presumes every piece of debt is community debt and shared between both spouses, unless there is clear and convincing evidence that states the contrary. Any debt incurred while the marriage lasted is also sorted directly into community debt, even if it was incurred just by one spouse.

In order to keep your hands free of any debt that you believe should not be your responsibility after the divorce finalizes, you will need to create quite a convincing argument to present the court. Financial records, receipts, and evidence of your spouse's intentional misspending may help. Otherwise, you should be aware that community debt may wind up as the responsibility of yourself and your ex-spouse.

Trading This Debt for That Property

You can also consider using debt to your advantage, as strange as that may sound. For example: If you and your ex-spouse are at odds over who gets to keep the family home, you could volunteer to take full responsibility for the mortgage, which you both incurred together, but also get full ownership of the home. Similar trades could be made for virtually any piece of valued property, such as keeping the family car but taking 80% of the family credit card debts. A judge may also use a similar debt division strategy if no agreement is made between the spouses.

Be Mindful of Original Responsibility

Creditors do not care what happens in family law court and only see your debt as money owed to them by whomever signed off on the loan, line of credit, policy, and so forth. If your ex-spouse accepts responsibility to pay off a debt that only has your name on it, the creditors will come to you looking for payments, should your ex-spouse stop making them. The parties originally responsible for a debt must be carefully considered whenever dividing it in divorce.

For more information about debt division in divorce, Taub & Taub, P.C. and our Woodland Hills divorce attorneys are at your service. Contact us today to learn about our service, which is backed by 40+ years of total family law experience.