When a divorce is on the horizon, you know there are big financial questions you have to answer. You may want to know what will happen to your savings, your house, or your car. But one of the biggest financial questions you must answer is: Who will pay the debts in your marriage?
The rules for dividing debt in a divorce are typically the same as the rules for dividing assets. However, you and your spouse may have options to create your own rules for handling your finances after your marriage ends. To get the best results, speak to an experienced attorney about your circumstances and your needs.
At Barnholtz & Kugler, we bring over 60 years of combined experience to complex family law matters. We strive to provide exceptional representation while helping clients understand their rights and protect their financial futures. Contact us today to discuss your case.
What Gets Divided in a California Divorce?
California is a community property state. Under the California Family Code, the property spouses acquire during their marriage (community property) is normally split equally in a divorce. Community property generally includes the following types of assets acquired during the marriage:
- Income,
- Real estate,
- Financial accounts,
- Personal property,
- Vehicles, and
- Retirement contributions.
While the court divides community assets, it typically allows each spouse to take 100% of their separate property. Separate property generally includes:
- Property owned before marriage,
- Property acquired through an individual gift or inheritance,
- Income and profits from separate property, and
- Property acquired after the spouses have legally separated.
These distinctions between separate and community property also matter when dividing debt in a divorce.
What Debt Issues Become Hotly Contested in Divorce Cases?
Financial disputes can quickly turn an otherwise manageable divorce into a challenging proceeding. Common disagreements involve:
- Hidden debts. One spouse may discover undisclosed loans or credit cards.
- Separation dates. Spouses sometimes disagree about the date of separation and when their community financial obligations ended.
- Business debts. Many spouses argue that business-related liabilities should be the other spouse’s responsibility.
- Wasteful spending. A spouse may accumulate substantial debts for purposes unrelated to their marriage or children.
- Insufficient assets. Sometimes, community debts exceed available community property.
California law provides many tools for dealing with these matters in court or through negotiation. We go over many of the rules below.
How Do You Split Debt in a Divorce in California?
The rules for dividing debts in a California divorce often boil down to who incurred the debt and when.
Debts Incurred Before Marriage
Debts incurred before marriage generally belong to the spouse who incurred them. For example, if your spouse entered the marriage with $20,000 in student loan debt, that entire obligation generally remains your spouse’s responsibility when the court divides the community estate. However, a spouse can choose to pay the other spouse’s premarital debt by entering into an enforceable premarital or marital agreement.
Debts Incurred During Marriage and Before Separation
Just like with assets, California community property debt rules often divide debts incurred during the marriage and before separation equally. This happens even when only one spouse signed the agreement that created the debt.
However, the court may divide debts differently if the spouses agree to a different distribution or a legal exception applies, including when:
- The community debts exceed the community or quasi-community assets, or
- Either spouse incurs a debt for the common needs of either spouse’s life or the life of any child they share who is entitled to child support.
When an exception applies, the court divides debts equitably instead of equally or according to each party’s ability to pay. For example, a court dividing credit card debt in a divorce may require one spouse to pay for the other spouse’s post-separation credit transactions involving food and clothing for the spouses’ child.
Why Does Financial Disclosure Matter?
When you have questions about dividing credit card debt in a divorce or what loan bills you might have to pay after splitting, review the law and your options with a knowledgeable attorney. California law requires spouses to exchange financial information during a divorce unless a statutory exception or valid waiver applies. Accurate disclosures help:
- Identify outstanding debts,
- Determine each debt’s classification, and
- Support a lawful division of liabilities.
Gathering and going over credit card statements, loan documents, tax returns, and financial records can help your attorney identify disputed obligations.
Worried about debt in your divorce? Tell us about your situation, and we’ll help you understand what you may owe and how to protect your financial future. Fill out the form below to schedule your consultation.
When Are Premarital and Marital Agreements Dividing Debt in a Divorce Enforceable?
Spouses can sometimes establish their own rules for dividing debts through premarital or marital agreements. However, not every agreement is enforceable.
A court may refuse to enforce an agreement if:
- A spouse didn’t have at least seven days to review the agreement before signing,
- A spouse proves they did not sign voluntarily,
- The agreement was unconscionable when it was signed,
- A spouse didn’t receive the required financial disclosures or have knowledge about finances before signing,
- A spouse lacked capacity when signing,
- A spouse wasn’t fully informed about their rights and obligations under the agreement, or
- A spouse didn’t have independent counsel or at least seven days to seek independent counsel before signing.
A premarital or marital agreement might give you more control in divorce court, but agreements can be tricky. Before relying on an agreement instead of California community property debt rules, consult an experienced family law attorney about the best course of action.
Protect Your Financial Future with Barnholtz & Kugler
Divorce should not leave you uncertain about your financial future. If you are wondering, “How do you split debt in a divorce?” we’re here to answer your questions.
At Barnholtz & Kugler, we bring experience, compassionate service, and determined advocacy to California residents going through the divorce process. With over 60 years of combined legal experience, our attorneys help clients address complex property division, contested debts, and difficult financial negotiations. We work to protect your interests while pursuing practical solutions that support your future.
You deserve clear answers and a legal team that takes your concerns seriously. Contact Barnholtz & Kugler online or by phone to schedule a consultation.