In California, payment of most debt acquired during the marriage is considered
the responsibility of both spouses. Debt acquired before marriage or after
the spouses separate is the responsibility of the person who acquired
it. Even credit cards listed in only one spouse's name become community
debts if they are acquired during the marriage. Nor will the fact that
the credit cards are in the name of only one spouse spare the other spouse
from his/her responsibility of the debt in a divorce action.
There are some exceptions to this law, including unpaid student loans.
Those debts are the responsibility of the student spouse and are not the
responsibility of the other spouse after separation.
Spouses can also choose not to be responsible for each other's debt
either by pre-nuptial or post-nuptial agreements. Those agreements are
subject to third party rights.
At the time of divorce, a court will divide community assets and debts
as equally as possible between the two parties. The divisions may be made
by offsetting one debt for another of similar value, offsetting one asset
for another, or even accepting more debt responsibility in exchange for
receipt of more assets. However, regardless of how the court divides the
debt, the rights of creditors of these debts will not be changed. For
instance, if a credit card issued in the wife's name is assigned to
the husband for payment, the creditor will enforce payment of the debt
against the wife, if the debt is not paid. However, the wife can request
the court order reimbursement from the husband if she pays the creditor.
Like dividing community assets in a divorce action, dividing community
debts can also be complicated. There can be many issues in determining
the division: Was the debt acquired during the marriage or before or after
separation? Did the community assets pay the separate debt of a spouse
and is the community entitled to reimbursement for that debt? Is the community
entitled to reimbursement from repayment of a student loan from the student
spouse? Is a spouse entitled to reimbursement from the community if his/her
separate property was used to pay a community debt? Can one spouse be
held responsible for creating liability in the other spouse for a debt?
Because debt issues in the event of divorce can be complicated, it is in
the best interest of both parties to obtain legal representation from
qualified family law specialists.