As you prepare your divorce settlement with your spouse, one issue that
may come up is the division of debt. Not only do you and your spouse have
to divide up the property and assets that were accumulated during your
marriage, you also have to equitably divide the obligations or debts that
you accumulated as a married couple.
Some examples of debt include:
- Consumer loans
- Medical bills
- Car loans
- Lines of credit
- Credit card debt
- Business debts
This blog post will focus on credit card debt. Our firm is made up of knowledgeable
divorce attorneys in Pasadena who are skilled and highly trained in the
practice of California family law. We encourage you to get in touch with
our office should you have any questions about the division of assets
and obligations in your marriage dissolution.
How Debt Is Divided in Community Property States
State laws about divorce differ. California is what is known as a “community
property” state. This means that assets and obligations accrued
over the course of the marriage are divided separately between spouses
in a divorce—generally speaking. If you and your spouse signed a
prenuptial agreement or post-nuptial agreement that dictates agreed terms
for property and debt division in divorce, this agreement will of course
apply. Otherwise, the court will order equal division of assets and obligations.
How Is Community Debt Differentiated From Separate Debt?
There are two types of debt that must be identified:
Community debt – This is, generally speaking, the debt you and your spouse accrued
over the course of your marriage prior to separation. The court considers
this debt to belong equally to both parties. For example, even though
only one spouse may have his / her signature on a credit card slip, the
court considers both spouses responsible for that debt, so long as it
occurred after marriage and before the date of separation.
Separate debt – Separate debt is the debt accrued post-separation or prior to
marriage. For this reason, affirming the date of separation could be very
important to your case. The state of California uses a two-part test to
determine the date of separation.
Determining the Date of Separation
Because debt that occurred after the date of separation is considered separate
debt and cannot be divided in a divorce proceeding, in some cases identifying
the date of separation is very important and could heavily influence the
outcome of a case. In fact, in some cases a separate trial is held to
identify the date of separation, which must be pinpointed before anything
else can be decided.
To determine the official date of separation, a two-part test is used:
Physical separation – When did the physical separation occur? Did one spouse move out?
Did the couple begin sleeping separately? This is the physical date of
Intent to end marriage – Physical separation is not sufficient however. One or both spouses
must also have “intent to end the marriage.”
Once the court has established the official date of separation, then debt
can be assigned. You are not responsible for credit card debts accumulated
by your spouse after the official date of separation. These issues can
be complex and challenging. It is always best to have a knowledgeable
attorney on your side representing you.
For more information, or to ask a lawyer about credit card debt and divorce,
please contact the team at Goldberg & Gille today at (626) 340-0955.