Once you have made the decision to move forward with a divorce, you might
be concerned about what will happen to your debt. California is a community
property state, so assets acquired and debts incurred by either spouse
throughout a marriage equally belongs to both spouses. Therefore, unless
spouses entered into an agreement regarding the division of property and
debt, the court will seek to split them evenly if possible.
The exception to this arises when the value of debts exceed the value of
community assets. In such cases, the court would order an unequal division
and assign the excess debts to the spouse who is in a better financial
position to pay them off.
Community Versus Separate Debts
There are two types of debt to be addressed in a divorce and determining
the nature of a divorcing couple’s debt is the first step.
Community Debt: Generally, community debt refers to debt incurred after the date of marriage
and prior to the date of separation. This type of debt belongs to both
spouses equally, even if only one spouse incurred them. For example, if
only one spouse signed on the credit card slip for a purchase, the debt
would still belong to both parties. Both spouses are also responsible
for the other’s income tax obligation so long as it accrued while
they were married.
Separate Debt: This refers to debt that either party accrued before marriage or after
the date of separation. It belongs solely to the spouse who incurred them.
This might seem straightforward, but determining the date of separation
is not always simple and courts sometimes hold a separate trial just to
determine this date, before any other issues can be decided upon.
Date of Separation
Determining the date of separation is a crucial element in deciding the
nature of a divorcing couple’s debt. When a separate trial is necessary
to determine the date of separation, California utilizes a two-part test.
Physical Separation: This is usually the easier element to determine. The date one spouse moves
out of a shared home is the date of physical separation, though some courts
might also consider sleeping apart as physical separation as well. For
example, spouses can continue to live together, but if they are sleeping
in different areas of a shared home, this might count as physical separation.
2.Intent: It is not enough for a couple to have been physically separated. One spouse
must have an intent to end the marriage. However, temporary or trial separations
will not satisfy this element.
Dividing debt in a divorce can be a complicated area of law, so you should
always consult with an experienced divorce attorney to ensure you are
not making any costly mistakes.
Beverly Hills Asset & Debt Division Attorneys
If you are in the midst of a
divorce, you might be overwhelmed by the complexities involved in asset and debt
division, both of which are often heavily contested issues. At Stolar
& Associates, A Professional Law Corporation, we are here to help
you protect your assets and ensure all debts are appropriately divided.
Our Beverly Hills divorce attorneys are committed to helping every client
protect their families and financial interests during this undoubtedly
difficult time. With over 30 years of combined experience, our team brings
more than legal skills to the table; we provide a truly caring perspective
and give each client the personalized, compassionate, and skilled representation
Call our office today at 310.984.1411 to schedule a consultation to discuss
your case with a legal member of our team.