EXPLAINING DEBT AND WHAT HAPPENS WITH IT FOLLOWING DIVORCE
Have you ever wondered what happens to your debt if you were to get divorced in California? The simple answer is that it doesn’t just disappear. You will still be responsible for some of your debt. You just need to figure out what portion of that debt you will actually have to repay if you get divorced.
California is a community property state. This means that all of the debt accumulated during the marriage is the responsibility of both spouses. Both spouses have to answer for any debt accrued during the marriage, even if one spouse ran up thousands of dollars secretly on a credit card.
The debt accrued during marriage will be divided between the two of you in a divorce just like your assets will be divided. When it comes to credit card debt, you might want to consider splitting it into two different accounts.
If there is still a mortgage on your home, this can be handled by one person keeping the home. However, one spouse will need to be removed from the deed to the home by the mortgage company.
If you have auto loans in both names, it is best to keep the cars and then refinance the loans in your own name. You will then be the sole person responsible for paying off the loan.
When it comes to student loans, these typically remain with the person who applied for and acquired the loan since it typically was in their own name for an education.
Are you moving towards divorce in California? This is a difficult topic for many couples, even if you know your marriage is no longer working. Know ahead of time how much debt you’ve built as a couple and how it can be handled during a divorce.
Source: Wise Bread, “What Happens to Debt After Divorce?,” March 30, 2018