Division of Debts in a California Divorce
In the State of California, debts between a couple are divided into two types – community debts and separate debts. Community debts are those debts that are accumulated by both parties to the marriage during the marriage until the date of separation. These debts are to be equally divided between both the parties even if only one spouse was responsible for incurring these debts. Separate debts are those debts that were incurred separately by the parties before the marriage or after separation and belong to the individual spouses who were responsible for incurring them.
Treatment of debts in California between a divorced couple
All debts in the State of California are to be treated as community debts as California is regarded as a “community property” state. This is of course unless the parties to the marriage had entered into a prenuptial agreement before the marriage regarding the division of assets and debts between them in the event that they decided to get divorced. If there is no prenup, then the court equally divides all debts between both spouses equally.
However, there is one exception to this rule and that is when the total value of the community debts exceeds the total value of the community assets jointly held between the two spouses. In this case, the court will order for a higher portion of the debts to be borne by the spouse who earns a higher income or who is in a better financial position to pay off these debts.
Importance of the date of separation
In the division of community debts in the State of California during a divorce, the date of separation of the couple is extremely important as only those debts that were incurred before the date of separation will be included in the community debts and all other debts incurred post the separation date will be assigned to the spouse who individually incurred them and the burden of paying those debts post-separation will not be borne or shared by both spouses.
Deciding the date of separation is sometimes a difficult task especially when the couple is in total disagreement with each other. Two tests can help confirm the actual and legal date of separation between a divorcing couple in the State of California –
- The first test is to determine the date of physical separation between the spouse, that is the date on which they began living or sleeping separately or the date on which one of either spouse moved out of the house.
- The second test is to determine when either spouse expressed their clear intention to end their marriage. This does not include a trial separation.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.