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Division of Marital Assets

Division of Debts in a California Divorce

By August 20, 2010February 28th, 2014No Comments3 min read

The division of assets and debts in a California divorce depends on their character.  Giving assets and debts a “character” sounds quite odd.  But how assets and debts are labeled ultimately determines who gets to keep what, and who is responsible for what.

Under California Family Code section 910 the community (meaning both spouses) is liable for all debts incurred during the marriage and prior to separation. It does not matter whether the debt was incurred by one spouse for his or her own benefit or for the family. It also doesn’t matter whose name appears on the bill or the credit card statements. If the debt was incurred during the marriage and before separation, it is a community debt and both spouses are equally liable. Debt incurred after separation may be either community or separate debt, depending on the circumstances.

Why is This Important?

Knowing what your liabilities are means you may have a greater opportunity to negotiate who pays what if post marital negotiations are amicable.  For example, one spouse can agree to pay off joint debts from their separate property in return for a greater share of the community property.

What if One Spouse Uses Their Own Property to Pay Off Community Debts?

You may be in a situation where it is actually in your best interest to pay off as much marital debt as possible before your divorce is finalized.  However, if you use your own assets to pay off a community debt post-separation, you may be entitled to reimbursement from the community property. The right to reimbursement does not include everything, so it is a good idea to consult with an experienced divorce attorney before paying any debts after separation.

Is the Date of Separation Important in a California Divorce?

It may be if one spouse is hoping to get reimbursed for paying for community debts.  Under current case law, if one spouse makes a payment towards a community asset, or on behalf of the community, that spouse is not entitled to reimbursement if the payment was intended as a gift – which is more likely if the couple had not yet separated. On the other hand, a spouse who stays in the family home post-separation while his or her spouse makes all the mortgage payments may find that the paying spouse is entitled to reimbursement from the community property for those payments. Needless to say, the divorce laws covering debt division and reimbursement for payments are complicated.

Protect Your Credit During Divorce

Another important aspect of dividing debt in a California divorce is ensuring that your credit is protected both during separation and as part of the divorce when debts are allocated between the spouses.  Not paying a debt while separated or after divorce may seriously impair your credit, despite the fact that your former spouse bears equal responsibility for it but is not contributing.

Contact Minella Law Group for Experienced Help with Divorce Law

For all these reasons, it is important to contact an experienced family law attorney as soon as you begin contemplating a legal separation.  Our family law attorneys at Minella Law Group can work directly with you and your creditors to ensure that you don’t end up paying money from your separate property that you will never get back if you eventually divorce.  Please just call us at (619) 289-7948 to set up an appointment.