How is Debt Treated in a California Divorce?

If you are planning to file for divorce in California or your spouse has already filed, it is essential to understand how property, including debt, will be divided. You may know that California is a community property state and that under Section 2550 of the California Family Code, all “community property” is divided equally between the spouses. While you might be trying to determine which assets will be classified as community property and which as separate property, you may have remaining questions about debts. How is debt treated in a California divorce?

In short, debt is a type of property for purposes of divorce and the division of community property and thus will be assigned and divided between the spouses accordingly. Our Santa Clara County and San Mateo County divorce lawyer can explain in more detail below.

Debts and Assets Are Property in a California Divorce 

Under California law, all “community property” is to be divided equally between the spouses in a divorce, and community property includes both assets and debts that were acquired or accrued during the marriage. All other debts are considered separate property.

More specifically, any debts that were accrued by either spouse after the date of marriage and prior to the date of separation will be considered community property and divisible in the divorce. Other debts, specifically those accrued prior to the date of the marriage or after the date of separation, will be considered separate property and will remain the responsibility of the spouse who incurred or accrued those debts.

As is the case with other community property, the deb incurred during marriage being in one spouse’s name does not mean it is not community debt and the responsibility of both spouses. Even if only one spouse applied for a credit card in their name and made charges to the credit card during the marriage, or similarly took out a personal loan in their name during the marriage, this debt is likely to be considered community property unless there was a specific agreement to treat the debt otherwise.

Dividing Community Debt in a Santa Clara County or San Mateo County Divorce

Debt that is considered community property will be divided just as assets considered community property are.

If the spouses can reach an agreement on dividing specific community assets and debts, the court can sign off on the agreement if it meets the requirements of California law. In an agreement reached between parties, the parties can decide to allocate certain assets or debts to either party to result in an even division of property. Otherwise, the court will divide the community assets and debts between the spouses equally, often resulting in an equalizing payment being owed from one spouse to the other when the community debt is deducted from the remaining community assets.

Contact Our Santa Clara County and San Mateo County Divorce Lawyers for Assistance with Community Property Division and Protecting Your Assets

In a Santa Clara County or San Mateo County divorce, all community property, including both assets and debts, will be divided between the parties while all separate property will remain separate. Whether you have questions or concerns about how certain debt will be divided in your California divorce, or about the classification of one or more debts, one of the experienced Santa Clara County and San Mateo County divorce attorneys at Foster Hsu, LLP can assist you. Contact our firm today to discuss the details with a lawyer.

Source:

leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=FAM&sectionNum=760