Division of Debts in a California Divorce

Dividing Your Debts

Dividing debts is part of dividing the marital estate in a California divorce. Just like property, debts are not all treated the same. Some debts are considered community debts, while others are considered separate debts. California's general framework is that the community estate is divided equally unless the parties agree otherwise or a statute calls for a different result.

Community Debt and Separate Debt

As a general rule, debts incurred during the marriage and before the date of separation are treated as part of the marital division process. By contrast, debts incurred before marriage are generally assigned to the spouse who incurred them, and California law also treats as separate debts those incurred during marriage that were not incurred for the benefit of the community under Family Code section 2622.

This means debt division often follows the same broad concepts as property division. In many cases, debts tied to the marriage are addressed as community obligations, while debts that are personal to one spouse may remain that spouse's responsibility. The important issue is not just when the debt was incurred, but also whether it was incurred for the benefit of the community, a concept reflected in Family Code section 2621.

The Goal Is Usually a Fairly Equal Division of the Community Estate

California's basic rule is that the court divides the community estate equally, and debts incurred during marriage before separation are generally divided under that same framework. That does not mean each individual account or liability must always be split exactly down the middle. It means the overall division of the community estate is generally intended to be equal under Family Code section 2550.

Debt Does Not Have to Be Split Item by Item

Couples do not have to divide every asset and every debt on a strict 50-50 basis. One spouse may take on more debt if that spouse is also receiving more assets, so long as the overall division remains fair and consistent with the parties' agreement or the court's allocation. California courts may allocate debt in a way that fits the overall division, including under statutes such as Family Code section 2626.

That is often how debt division works in practice. For example, one spouse may keep a house or another valuable asset and also assume more of the marital debt associated with it. In another case, one spouse may agree to take a larger share of credit-card debt in exchange for receiving a larger share of liquid assets or a different support arrangement.

Debt After Separation Can Be Treated Differently

California law also distinguishes between debts incurred after separation and debts incurred before separation. Debts incurred after separation may be assigned differently depending on the nature of the obligation. For example, debts for common necessaries of life may be allocated based on the parties' needs and ability to pay under Family Code section 2623, while nonnecessary debts incurred after separation are generally assigned to the spouse who incurred them under Family Code section 2625.

A Divorce Agreement Does Not Automatically Bind the Creditor

One practical issue people often overlook is that an agreement between spouses does not necessarily change the rights of the lender or creditor. If both spouses are legally liable on a joint debt, a divorce judgment assigning that debt to one spouse does not automatically force the creditor to release the other spouse.

If the spouse assigned the debt does not pay, the creditor may still pursue both spouses and the missed payments may affect both credit reports.

Conclusion

In California, debt division generally follows the same basic structure as property division. Community debts are usually addressed as part of an equal overall division of the community estate, while separate debts are generally assigned to the spouse who incurred them.

But that does not mean every debt has to be split exactly 50-50. In many cases, one spouse may take on more debt if that spouse is also receiving more assets or is otherwise in a better position to pay.