How All Types of Debt Are Divided in a California Divorce

Tuesday, December 18th, 2018
Categories: Blog

When a couple divorces, one of the most pressing issues that they will have to work together to resolve before a court will finalize their divorce is that of division of property and debts. Because California is a community property state, all community property (debts and assets alike) must be divided equitably amongst parties.

But what is considered community or separate debt can be confusing and even contentious. At the Law Offices of Evan Braunstein, our Century City divorce lawyer can help you to understand the various types of debt and how they are to be divided. Call today for more information.

What’s Community vs. Separate Debt?

Community debt refers to any debts that were acquired during the course of the marriage; separate debt is that debt which was acquired prior to the marriage. Consider some of the following common sources and types of debt and whether or not they are community or separate debt:

• Credit card debt. Most courts will hold that credit card debt that was accumulated by either spouse during the course of the marriage is community property, meaning that both spouses are equally liable for the debt. However, a court may find that only one party is liable for the debt if it was accrued in a reckless manner or in a way that the other spouse had no knowledge of or did not approve, especially if the expenditure occurred during a time of separation.
• Mortgage debt. Mortgage debt is almost always considered to be marital/community debt, even if the house was purchased by one party prior to the marriage. If both parties lived in the home throughout the course of the marriage, they will both likely be liable for the debt.
• Motor vehicle debt. If a spouse in a marriage purchases a car during the course of the marriage, even if the title is only in that spouse’s name, both parties are liable for the debt.
• Student loan debt. Student loan debt is one of the more complicated debt types in a divorce. Clearly, if the debt was accumulated during the course of the marriage, both parties are liable for it. But even in situations that the student loan debt was accrued prior to the marriage, the court may still consider it to be community debt if both parties benefited from the debt.

The good news is that regardless of the types of debts that your marriage has, you and your divorce spouse have the option to negotiate your debts and reach an agreement out of court. If you cannot reach an agreement, only then will you need to go before the court and have the case settled for you. This is often expensive and contentious, and may not yield the result you’re hoping for, however, so reaching an agreement out of court is strongly recommended.

Our Family Law Attorney Can Help

At the Law Offices of Evan Braunstein, we know you have a lot of questions about asset and debt division in a divorce. Our Century City family law attorney can guide you through debt division and represent you in negotiations. Please reach out to us today for more information.