Individual and Shared Debt in a Los Angeles Divorce

In Los Angeles County and Ventura County as elsewhere, assets must be divided when you and your partner divorce. Likewise, the debt must be divided. This process requires identifying individual and shared debt. Below is a brief overview of what this entails in California.

What is considered individual debt in a California divorce?

Individual debt or separate debt is debt that is not part of the shared or community debt. This debt is owed by the individual partner only. Typically, this debt is the debt the partner had prior to the marriage. This debt may include things like:

  • credit card debt,
  • school loans, or
  • medical bills.

There is one issue to keep in mind, however, with individual debt, and that is this: if the individual debt was paid off during the marriage using community property income (e.g., salary), then the other spouse may be entitled to reimbursement. If, on the other hand, the debt was paid off using non-community debt (e.g., money from an inheritance), then the other spouse is not entitled to reimbursement.

What is considered shared debt in a California divorce?

Shared debt is community debt. This debt is debt you acquired while married. You may have taken out a mortgage, a loan of credit, credit cards, auto loans, or any other type of consumer loan, all of which is community debt. In fact, all most all debt you take out while married is community debt. 

Further, if one spouse took out a personal guarantee for business debt or a line of credit, that will also be considered when assessing the community debt.

It is important to keep in mind, too, that creditors can and will hold both spouses liable for any joint debt. This is also true for any debt incurred during the divorce process. Thus, debt is a real concern, especially for couples who have a lot of debt and may be fearful one spouse will fail to pay his or her share of the debt, and as a result, the creditor will come for you. In very limited cases, you may be able – through successful negotiations by your attorney – get a creditor to release you of responsibility for a debt that you prove is solely the debt of your spouse.

How is the shared debt divided in divorce proceedings in Los Angeles County?

As California is a community property state, the community estate is responsible for the debt you incurred during the marriage. During the divorce, you and your spouse can determine how the debt will be divided and paid. This is not as easy as it sounds – there may be some serious bitterness underneath this debt. 

But if you can't come to a mutual agreement, the judge will decide for you. It is not necessary that the debt will be divided equally among the partners. It could be distributed in accordance with the way assets are distributed, meaning the spouse who walks away from the divorce with the most assets may also walk away with the most debt. It all depends on many different variables and circumstances unique to each divorce. 

For example, if one spouse used a credit card to spend exorbitantly on clothes for him or herself, then the judge may let the person keep the clothes and the debt. If one spouse is given the marital home, then the judge may order that same spouse to pay the mortgage, too. Likewise, if a spouse keeps an automobile, then that spouse may also have to continue to pay the loan. 

But then again, in each of the above three scenarios, there may be circumstances where a spouse won't be made to pay the debt. For example, if one spouse is granted primary physical custody of the children, and she or he will live in the marital home with the children, the other spouse may be ordered to pay the mortgage, at least in part.

Contact a Certified Family Law Specialist in L.A. Today

Are you thinking of a divorce, but is the debt worrying you? We at Hoffer Family Law Firm understand your concerns. Rest assured, however, we have the insight, knowledge, and resources to help you. Divorce is always difficult emotionally and financially, and that financial burden on top of any shared debt can only make matters worse. Speak to us. Let us provide you with direct, honest answers and a plan to move forward.

Contact Thousand Oaks attorney Jeffery Hoffer today to schedule a consultation. 

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