Married couples combine their households and their finances to enjoy a higher standard of living. By sharing resources and splitting expenses, they can both benefit. It is common for married couples to take for granted that they can trust one another with those shared resources. They often deposit their paychecks into the same checking account, and the spouses will both use the account for necessary expenses. They may share responsibility for household expenses, and they may even cosign for lines of credit.
Ultimately, debts can play a major role in the financial circumstances of a married couple. Joint credit card accounts, credit cards belonging to just one spouse, personal loans, student loans and various other debts can have a profound impact on the budget of a California family. Debt obligations can cause stress and may harm people’s relationships with their spouses. Debt can sometimes contribute to people deciding to file for divorce and can impact the process of divorce itself.
What happens to debt in a California divorce?
Spouses generally have to share their financial obligations with each other just like they share their assets and income. When people think about California’s community property laws, they will usually focus on what it means for their shared assets. People may worry that they will have to divide everything they own exactly in half with their spouse.
Community property division actually involves looking at not just resources but also financial obligations. Debts can play a role in how couples or judges handle the marital estate. As with assets, judges can order that couples share debts or assign them to one spouse or the other. They can also potentially order the use of marital resources to pay those debts.
The financial circumstances of each spouse and the reason that they took on different debts will inevitably influence how the spouses want to divide their shared financial obligations. Many couples would prefer to settle property division matters when possible so that they have control over the specific terms and what debts they must personally repay. Those who can’t agree, however, will need to have a judge determine what happens with their financial obligations and assets.
Understanding how debts will influence property division may benefit people preparing for a divorce in California to employ informed approaches. With that said, seeking legal guidance is also advisable in all but the most straightforward cases.