Bartholomew & Wasznicky LLP
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Dealing with and dividing debt during divorce

When people think about splitting up everything during a divorce, they often immediately go to certain obvious things: a home, money, retirement savings and custody of a child. These are the assets that people most often want to protect and fight for.

However, there is something else that must be divided in a divorce; something that spouses may be more than happy to give up ownership of during property division discussions. That something is debt.

Just like joint bank accounts, properties and other things commonly categorized as community property, shared or marital debt must also be divided between spouses in the event of a divorce. In many cases, debt plays a significant role in a property division agreements or court orders.

According to property and debt division laws in California, debt is divided in much the same way that property is divided. All debts incurred during the marriage are presumed to be community to which both parties are responsible. In general, spouses will calculate all their income, assets and debt, and categorize each item as either separate or community property.

If debt is categorized as community property, most often both spouses will be responsible for paying it off. Then spouses (or the court) must decide how to fairly divide debt while maintaining a balance with property that is also being divided. Consideration has to be given to ability to pay the debt. While one person may end up with more tangible assets, but he or she could also be held responsible for paying off more debt.

It is crucial that people who are paying off shared debt come to a legally enforceable payment plan, not just an informal agreement. Credit card companies and other people who may be owed money do not care if two people get divorced and agreed for one person to take ownership of the debt. These parties can pursue payment from each spouse, and this can cause some major problems when and if a former spouse falls behind on payments. Rarely, will a credit card company release one party for responsibility where they have both parties contractually liable.

Dividing debt can be a complicated, sensitive and unpleasant step in the divorce process. Unfortunately, it is unavoidable for many people across California. Instead of trying to ignore the appropriate steps or try to rush through this stage just to get it over with, divorcing spouses may want to discuss their individual case with a family law attorney familiar with the division of debt and community property laws in this state.

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