January 29, 2012
/24-7PressRelease/ -- Divorced Spouses Share Liability for Debt in California
In marriage, it is often the case that one spouse gets in the habit of accumulating debt while the other sticks to a balanced budget. In California, the debt-ridden spouse may think they can avoid bearing the entire burden because of community property laws, under which each spouse is responsible for half the couple's debt. If they divorce, however, this may not hold true.
Divorce in Community Property States
Since spouses share responsibility for their debt during the marriage in community property states, this debt is generally divided fairly equally when they divorce. Even if the debt is incurred by only one spouse, or a credit card is issued in the name of one spouse only, the spouses share these financial obligations and creditors can try to collect from either one.
Even if one spouse takes on certain debts through the property division found either in a divorce settlement or court decree, the other spouse can be forced to pay. The settlement or decree might state who is responsible for the debt, but it does not release either spouse from their legal obligation for the debt if the other fails to pay.
Separate Property
Not all property is labeled "community," though. Property that a spouse owned before the marriage, as well as gifts and inheritances received while married, is "separate property" and is kept separate rather than split evenly. Debts, such as credit cards issued after separation, can also be separate property.
Impact of Moving to a Non-Community Property State
According to personal finance columnist Sally Herigstad, post-divorce obligations change if the spouses move to a state that does not follow the community property concept. If that happens, the spouse who incurred the debt will be liable for it, and creditors can only go after that spouse.
For example, say a husband in California signs a note for a brand new BMW; the wife is also responsible for the car debt while she lives in California. If they move to a non-community property state, then divorce, the wife may be off the hook. Creditors can only seek payment from the husband.
Spouses going through divorce or deciding whether to file for divorce in California should consider the debt liability consequences of divorce before taking action. A skilled property division lawyer can assist with categorizing property and debt and anticipating how a court would divide it.
Article provided by Law Offices of Evan Samuelson
Visit us at http://www.samfamlaw.com/
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