Statistics show that married couples are in debt with mortgages, cars, credit cards and student loans. Owing money is hard enough to cope with when all is well on the home front, but things can turn ugly fast during a divorce. In California, couples will need to discuss asset and property division, including how to separate debts.
California is a community property state and holds spouses responsible for all debts incurred during the marriage regardless of whose name is on the account. In most cases, any debt that is signed by both parties remains the responsibility of both parties. Lenders and credit card companies will still view both as liable no matter what the divorce papers say. A divorce decree is a contract between a husband and wife, and creditors do not have to abide by it.
Closing joint accounts and paying all debts in full at the time of divorce are the best options to protect credit ratings. Other options are to refinance liens so they become the sole responsibility of the ex to whom they are assigned. This may be difficult for one income, but it is important to protect financial security and credit. Experts also advise monitoring credit reports for alerts if an ex stops paying.
Divorce, asset and property division can be daunting, but taking the proper legal steps will ensure the best outcome. In California, the advice and guidance of a seasoned divorce attorney may be the best option. A strong, solid, well-versed lawyer can help make a difficult transition easier.
Source: fool.com, “You Could Get Stuck With Your Spouse’s Debt in Divorce”, Christy Bieber, Nov. 16, 2017