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Debt and Divorce in California

During a divorce, property and assets must be divided amongst the partners. These assets include all debts incurred during the marriage. Debt can be a huge source of contention during the divorce process in Orange County, CA. Couples with high debts and high assets may travel a rocky road without proper assistance.

California is a community property state — this means all marital property is divided equally between the spouses. All debts are considered the equal responsibility of both spouses, even if certain debts are in one spouses’ name only. Even debt that was incurred by one spouse is considered a shared obligation. For example, one spouse uses a credit card in his or her name to buy clothing for him or herself. In all cases, each spouse is responsible for 50% of the debt. If one spouse uses separate, pre-marital assets to pay off the other party’s debt, the spouse may be entitled to reimbursement upon dissolution.

Applicable debt may include:

  • Credit cards
  • Medical bills
  • Student loans
  • Home loans
  • Car loans
  • Private loans
  • Tax obligations

You may consider selling any real property jointly owned to pay some of the debt down. To deal with credit card debt, you might open a credit card in your name only and transfer the balance of a joint credit card onto the new card. Some people simply split the debt down the middle and deal with repayment separately. Each case is different. Consult with your Irvine divorce attorneys to learn which approach is appropriate for your situation.

Michel & Rhyne is a family law firm located in Irvine, CA. We help protect your assets and property during the complicated and stressful divorce process.

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