The Cost of Divorce: Who Pays for What in a Divorce?

The financial price tag for divorce is not limited to attorney’s fees and court costs. For instance, there might be mortgages and credit cards debts to be paid, and professionals such as real estate agents and accountants to be compensated. This means the cost of divorce will be paid either from one or both spouses’ incomes, or from martial or non-marital assets. No matter who actually pays the cost of divorce, bothparties are affected, as there is less cash available when all is said and done. This is why you should strive for amicability during a divorce, not waste money fighting about costly, unproductive issues as the cost of divorce can cause significant hardships.

Debts

All community debts and liabilities are a part of your divorce settlement and there are some instances where non-community debt may be included. Debt reduces the gross value of your estate and will have an impact on how the court divides property and orders debt paid. Examples of debt include mortgages, lines of credit, credit cards, car loans and all other consumer loans. If you or your spouse own a business and have personal guarantees made for business debts or lines of credit they, too, will need to be addressed.

Joint Debts

California is a community property state, which means creditors can hold both spouses liable for any debt incurred individually during the marriage and subsequent separation. To avoid paying for debt you did not incur, you should ask for all debts to be assigned at judgment.

Couples commonly have joint credit cards and it’s not unusual for one or the other spouse to use those cards during separation and/or divorce proceedings. With notable exceptions, including non-employment and lack of access to cash, that spouse should be responsible for the incurred debt. However, creditors simply want to be repaid and have no interest in who will be doing the paying. While possible in theory, it’s not likely that a creditor will release the non-responsible spouse from liability, making it necessary to request the court to assign those debts as part of your divorce ruling.

Mortgages

A couple’s home is often their most valuable asset. When a separation occurs, decisions need to be made over who stays in the property and who makes the mortgage payments. If one party is living in the house and making the mortgage payments, the court may award them half of those payments at final judgment (known as “Epstein Credits”). If the party living in the house is not making any payment towards the mortgage, the other party may under California law receive reimbursement for post-separation mortgage payments, as well as compensation for the resident spouse’s use of the family home during the divorce (“Watts Charges”).

Attorney’s Fees

The assumption is that each party in a divorce is responsible for his or her own attorney’s fees. There are times, however, where the California Family Code permits the judge to charge, or assign, one divorcing spouse’s legal expenses to the other spouse. Financial disparity, is the most common reason, meaning one party has a clear advantage over the other in being able to afford legal assistance.

Determining who is responsible for making payments, or who is entitled to reimbursements, is a complicated area of family law. Judges carefully take into consideration how the debt was incurred and each party’s ability to pay. It’s a sound investment in yourself to consult an experienced family law attorney to understand what your divorce will cost, both for you individually and for the marital estate.

Summary

Divorce is a very stressful and emotional process, even more so when your finances are on the line.  Choosing the right attorney can make a significant different in the amount of money you spend on your divorce and how your divorce ends.  The experienced staff at Minella Law Group will work with you to ensure your needs are being met while also taking into consideration your budget.  For more information or to schedule a consultation, click the button below, or call us at 619-289-7948.  We look forward to helping you!