Dividing property incident to divorce is not just putting your assets into one pile for each spouse. You also must divide the debt that the community has accumulated during the course of your marriage. In California, community property includes all assets and liabilities incurred from the date you married until the date you separated other than separate property that was given by gift or inheritance. Once you have separated you now begin to accumulate separate property assets and debts.
- Credit Cards
Credit cards can be created in your name, your spouse’s name, or in both names. Sometimes one spouse is a cosigner on the other spouse’s credit card. During the divorce process you will want to make sure that the credit cards are being paid in a timely fashion so that you do not ruin your credit. Once the debts are assigned to each spouse in the judgment you will need to make sure that the credit card company knows who will be paying the debt. This can help minimize the risk of the credit card company coming after you for repayment of your spouse’s assigned debt. Once you and your spouse have separated you might consider having only separate credit cards in order to streamline the division of those debts at the conclusion of your divorce.
- Mortgages and Loans
Mortgages and other loans are very common. During the pendency of the divorce you must take care to keep up on the payments to protect your investment and your credit. In order to keep tabs on the payments of these loans it can be helpful to set up an online account that both spouses can access. In this way you are both able to stay up to date and can pay the loan to preserve your credit and assets. Once the divorce is finalized, if one spouse will be keeping the property, he or she will need to refinance the loan solely in his or her name.
- Student Loans
Many couples have student debt that has occurred before or during the marriage. Under California law the student loan debt is assigned to a spouse based the duration of the marriage and whether or not the marital estate has benefitted from the education. In many cases student loans are simply assigned to the spouse who received the education. Making decisions about dealing with debt while in the process of divorce can be difficult. It is important that both spouses recognize the need to continue paying debts in order to preserve their credit and assets post separation. In addition to keeping your payments current, you should keep in mind that community debts can be divided between you in the divorce. Debts incurred after separation may be solely your debt to pay, so keep that in mind before you start racking up credit card bills immediately after separating.