Credit card debt and divorce in community property states

On behalf of Law Office of Ann A. Thomson, A Professional Law Corporation posted on Friday, July 19, 2013.

California is a community property state, creating some important issues for couples who decide to divorce.Property division can be challenging, but debt division can be a confusing issue that has the potential to create long-term credit problems for one or both parties.

A shared debt incurred during the marriage is still the responsibility of both parties upon divorce. If one spouse fails to pay on the account after a divorce, the other can be held responsible for paying. This can lead to serious problems in cases involving one individual making payments and the other continuing to use the account.

There are some protective steps that a spouse can take to limit the ability of the other spouse accruing further debt on a community account. One option involves contacting the credit card company to freeze the account so that further spending won’t be permitted. Parties can also explore transferring their portions of the balances to new, individual accounts. It’s also important to consider selling an asset to resolve outstanding debts.

Although California law requires that community property be divided equally, it stipulates that community debt must be divided equitably. It’s important for individuals facing divorce in the state to consider working with a divorce attorney to ensure that all financial angles of the proceedings are covered appropriately. A legal professional can insist on safeguards to protect a client against post-divorce debt accrual. A lawyer may also be able to provide unique solutions that have worked well for other clients in similar situations. Because divorce rules can be very complex, it’s helpful to have expert input and direction in finalizing details.

Source: Fox Business, “Divorce and Card Debt in Community Property States“, Sally Herigstad, July 17, 2013

From offices in Seal Beach, the Law Office of Ann A. Thomson serves clients throughout Southern California in communities such as Seal Beach, Santa Ana, Brea, Yorba Linda, Fullerton, Corona Del Mar, Costa Mesa, Newport Beach, Irvine, Laguna Beach, Dana Point, Mission Viejo, San Clemente, San Juan Capistrano, Anaheim, Fountain Valley, Garden Grove, Long Beach, Huntington Beach, Norwalk, Torrance, Rancho Palos Verdes and Los Angeles.
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