Divorce isn’t fun. There are many little details to work out before both parties can really move on with their lives. One of these issues is determining how debts will be dealt with in the divorce negotiations. Our San Marino divorce attorneys explain how California courts divide debt in a divorce.
Community Property vs. Separate Property
Debt is considered property in a divorce. In California, the law says that any debt bought prior to marriage is the responsibility of the individual. This is because the debt is considered separate property. Any debt accrued during the marriage belongs to both parties, meaning it is community property. During the property division process, the court will only divide assets that are community property.
A property division plan should split up debt and property fairly so that each party has about the same value's worth in property. Debt can be used to balance out the amount of property each person gets. For example, if one spouse is receiving a highly valuable asset in the divorce, they can make it fairer by taking on the responsibility of taking care of debt.
Each party should have the same amount of value in assets. To do this, each party should have an equal net share of assets. To calculate the net share, subtract the amount of debt owed from the joint value of all the community property owned. The amount of value left should then be divided between the parties.
How to Determine the Value of Your Assets
A full list of all property needs to be compiled to determine the total value of assets. During a divorce, each party will have to declare all assets and debts, including community and separate property, in the Schedule of Assets and Debts form. This will allow each party to compare the amount of value in property with others. Then each party can propose a way to divide or settle the debt in a fair and equal way.
Problems with Debt Division
Dividing debt can get complicated, and problems can arise even after the divorce is finalized. For example, one party gets the house because they agreed to pay off credit card debt, but they stop making payments towards the debt. Legally the credit card company can come after the person who signed up for the credit card, even if they are no longer responsible for making payments.
Contact a Pasadena Property Division Lawyer
It’s important to avoid potential problems with dividing debt. The skilled team of divorce attorneys at the Law Offices of Christopher L. Hoglin, P.C. can help you navigate the process of dividing assets and debt to ensure you avoid making unnecessary or costly mistakes. We are more than happy to help you with all your California divorce needs.
Call us today at (626) 653-4075 to set up an appointment to discuss your case.