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What happens to your debt if you file for divorce in California?

| Sep 28, 2021 | Divorce

Your finances are likely very intertwined with your spouse’s. Separating your financial obligations and assets can be one of the hardest parts of getting a divorce. 

Many people planning a divorce in California focus so intently on the division of their assets that they don’t stop to think about dividing their debts as carefully as they probably should. 

What does California’s community property doctrine mean for the debt that you incurred while married?

You have to divide your debts just like your assets

The community property rules in California apply to both your personal debts and your assets. The debts that you and your spouse have accrued during your marriage belong to both of you the same way that your income and possessions acquired during it do. 

Dividing your debt can play a big role in the overall property division process. One spouse could potentially receive more property because they also will assume more debt. The allocation of debt can have an impact on someone’s future budget, which can make debt issues particularly important for dependent spouses. 

The courts will do their best to divide all community debts in a litigated divorce. Accounts held by both spouses are obviously subject to division in a divorce. Credit cards and lines of credit held by only one spouse but used for the household during the marriage are also community property. Even student loans taken on during the marriage might be community property that the spouses will both have to help repay. 

Learning more about property division rules in California can help you better plan for life after a divorce.