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Dividing Debt In A California Divorce

Entering into a marriage is not only a union of hearts, but a merging of financial responsibilities. California is a community property state and it is important to understand how debts that are incurred before, during, and after a marriage are treated under the community property laws of the State. This understanding is crucial for all couples either contemplating marriage or divorce, and even those couples that are contemplating larger financial decisions during their marriage. This blog post will delve into the courts treatment of pre-marriage debts, debts incurred during the marriage, and post-separation debts under California’s community property laws.


Pre-Marriage Debts

When individuals enter into matrimony, they often bring with them various financial obligations incurred before tying the knot. California law generally treats pre-marriage debts as separate property, meaning they belong solely to the spouse who incurred them. To learn more about separate property, click here.


However, complexities surrounding the liability for such debt may arise depending on the nature of the debt. Except for some explicit limitations, the community estate is liable for either spouse’s premarital debts. This includes debt that a spouse incurred on their own before marriage even if it was not for the mutual benefit of the marriage. The community estate is liable for debts such as: child support obligations from previous relationships, spousal support obligations from previous marriages, and a spouse’s previous income tax debt.


As stated above, there are explicit limitations to the community estates liability for a spouses premarital debts. The nondebtor spouses earnings during the marriage are exempt from liability for premarital debts incurred by the other spouse. This means that a nondebtor spouses community income received from passive investments and gifts is still subject to liability for premarital debts incurred by the other spouse, but a nondebtor spouse’s separate property is not liable for the other spouses premarital debt.


Debts During the Marriage

Once married, couples often take on joint financial responsibilities, including debts acquired during the marriage. In California, community property laws dictate that most debts incurred by either spouse during the marriage are considered community debts, regardless of which spouse is responsible for the debt. Community debts are generally divided equally between spouses or divided based on each spouses ability to repay the debt in the event of a divorce or separation. To learn more about community property, click here.


Post-Separation Debt

In the unfortunate event of separation or divorce, the division of debts becomes a pivotal aspect of the legal proceedings. California community property laws dictate that community debts are typically divided equally between spouses or divided based on each spouses ability to repay the debt, regardless of who incurred the debt. This means that both spouses are liable for debts incurred by either spouse after the date of separation for the “necessaries of life” or for the benefit of the community, unless there is a written or signed agreement stating otherwise.


However, if the post-separation debt was not incurred for the “necessaries of life,” e.g., food, clothing, shelter, or illness expenses, then such debt is the debtor spouses separate obligation. 


It is essential for separating couples to clearly identify and document all outstanding debts, including those incurred individually and jointly during the marriage and after separation. Keeping detailed records of all financial transactions and debts incurred during the marriage can prove beneficial in the event of separation.


Understanding Your Liability

Navigating the complexities of debt in a marriage requires a proactive approach. Understanding the nuances of pre-marriage debts, debts incurred during marriage, and post-separation debts under California community property laws is crucial for maintaining financial stability and ensuring a fair resolution in the event of a separation.


Seeking the guidance of experienced attorneys who specialize in divorce and family law can help you navigate these complexities and protect your financial interests during this challenging time. At Harris & McKeown, our team of Certified Family Law Specialists have been assisting clients throughout Southern California for over 10 years.


If you are located in Orange County, Riverside County, San Bernardino County, or Los Angeles County and are currently navigating financial issues in a divorce, schedule a free consultation appointment here or by calling (949) 297-6529.


With the right support and knowledge, you can move forward with confidence and begin the next chapter of your life.



DISCLAIMER


THIS INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY.

EVERY CASE IS DIFFERENT AND THIS GUIDE SHOULD NOT BE CONSTRUED AS

LEGAL ADVICE. THIS ARTICLE DOES NOT CREATE AN ATTORNEY CLIENT

RELATIONSHIP BETWEEN THE READER AND ITS AUTHOR. IF YOU HAVE LEGAL QUESTIONS, CONSULT WITH A FAMILY LAW ATTORNEY.

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