Dividing your property will likely be a point of contention at the end of your marriage, especially if you have quite significant personal assets. Frequently, divorcing spouses prioritize assets that they care about when strategizing or negotiating for property division purposes. Houses, businesses and retirement accounts are frequent sources of disputes during divorce.
However, property division rules also apply to your shared debts. What are some of the ways to handle your debts in a California divorce?
Identify your separate and marital debts
One of the most important differences when looking at your assets and debts is which are community or marital property and which are separate or individual property. California community property laws require that spouses split all assets and debts that are part of their marital estate. When you incurred the debt matter more than whose name is on it.
If your spouse already had tens of thousands of dollars in student loan debt when you got married, those debts will likely remain their separate property. However, if they went back to school during your marriage with the intention of supporting your family with their education, you may be responsible for some of their debt.
Divide the accounts or use the value of the debts
When it comes to actually splitting up the debts you share, there are numerous approaches you can take. One spouse can take more debt and also more assets from the marriage. You could divide the accounts between spouses based on their current balance or use the value of the debt to justify other property division decisions. Looking over your financial circumstances can help you prepare for property division in your California divorce.