California is a community property state, which means that, when you get divorced, you and your ex-spouse divide everything acquired during the marriage in an equal split. That includes not only your assets such as real estate and retirement assets, but even mortgages and credit card debt.

One of the first steps in a divorce is to gather information about all debt owed by each spouse. The debts then must be categorized into individual debts and community debts. In general, individual debts are those that one of the spouses acquired either before the date of the marriage or after the date of separation. Community debts are those taken on by either or both spouses between the date of the marriage and the date of separation. Even if a debt is only in one spouse’s name, if it was acquired during the marriage, it is considered community debt, and must be split between both parties.

There are some exceptions to these general rules. Some of them are:

  • Student loan debt — Usually, student loan debt is treated as individual property; however, if the student debt is old and the entire family has benefitted economically from the degree, the court may deem the student loan debt community property.
  • Civil liability debt — If one spouse has a civil judgment issued against them, even if it occurs during the marriage, the debt is individual.
  • Gambling debts and debt acquired while engaging in an affair — Because gambling debts do not benefit the family, they are treated as individual debt. Similarly, any debt run up by a spouse to fund an extramarital affair stays with that spouse after the divorce.
  • When debts exceed assets — If the couple’s community debts exceed their assets, the court may assign more debt to the spouse who is more financially capable of paying it off.

Once the debt is categorized as individual or community debt, the parties or the court must decide which debts to assign to each spouse.

Divorcing parties must be made aware that creditors do not have to honor divorce agreements about which spouse is responsible for the debt. For example, if a divorce agreement assigns a Mastercard debt to the ex-husband, but the ex-wife signed was the one who signed up for the Mastercard, the credit card company may sue the wife for payment. The wife’s only recourse in that case is to sue the husband for reimbursement.

Strategic Law Command provides clients facing divorce in the Greater Sacramento area with knowledgeable counsel and aggressive advocacy. Call 916-787-1234 or contact us online to schedule a consultation at our Roseville office.