There are different types of debt that need to be divided up in a typical California divorce. Often there are loans against the house and cars, as well as credit cards and other types of credit lines. In the course of the dissolution process, the debt needs to be divided between the spouses in some equitable way, paid down or paid off.
With the exception of the welfare of minor children, the divorce process is all about money and financial planning. When possible, our law firm tries to encourage both clients to do what they can to pay down or pay off all their debt so that when all of the community assets are finally divided, the parties can carry on with their lives with a fresh slate, without all of the old debt hanging over their heads.
One finds it is easier said than done but at least it is something to look in to. Problems arise when there are monthly payments on different debt like credit cards and perhaps the parties until now have lived paycheck to paycheck.
Then, suddenly, the court tells one of the parties that they will have to start paying alimony and child support to the other party which can cause a considerable strain on a person’s limited resources that were tight even during the marriage. Sometimes there’s considerable debt and payments have to be made and there’s simply not enough money to go around.
With the goal of reaching a resolution that works for everyone, we try to get cooperation from sides and/or get the courts to address the debt issues early on before it gets out of control.
Division of Debt in a California Dissolution
Q: If there is a large disparity between the income of one party to the divorce as compared to the other party, is the debt divided evenly between the parties?
A: That is right because California is a community property State, which basically means that the assets and debt accumulated during marriage belong equally to the spouses.
That is, however, until you run out of marital assets. If the total community debt is greater than the total marital assets, then once you get to the break-even point, the court can assign proportionally any debt beyond the value of the marital assets, based on equity, or who can better afford it, or who caused the debt or other criteria, at the court’s discretion.