Pasadena divorce laws require both assets and debt to be divided when a couple wishes to end their marriage. Many people fail to realize that debt can sometimes be considered a joint debt even if only one spouse signed the application.
If both you and your spouse signed the original loan application, there is no question that you both are liable for the debt. If you did not sign the loan application, you may or may not be responsible for the debt under California’s community property laws. If debt was incurred for a joint benefit, and your spouse has been sued with a judgment rendered for the specific amount owed, the creditor could hypothetically come after you with a wage garnishment for up to 25% of your earnings because you live in a community property state.
Credit card debt used to pay general household living expenses would likely be considered joint debt. Student loan debt may be considered joint debt if the loan was used to pay for living expenses while your spouse attended school. Only payments used for tuition would be solely for his or her personal benefit.
Creditors generally don't go through the trouble of suing both spouses, however, because it tends to lengthen the legal process involved in securing a judgment. The cost of obtaining a judgment needs to be less than the creditor's potential benefit from forcing you to repay your spouse’s debt.
If you and your spouse are going to split marital debt during your divorce, you should ask for an indemnity clause in your settlement agreement. This gives you the right to go back to court to seek reimbursement if you end up paying money on debts that your spouse has defaulted upon.
How Can We Help?
Please call our office at (626) 683-8113 or email us at info@PasadenaLawOffice.com if you have questions about how debt will be divided during your divorce. Our skilled Pasadena divorce lawyers have the experience needed to advocate for your interests throughout the settlement process.