When a couple in California owns many valuable assets, should their marriage start to fail, both parties may be concerned with who gets what. And, indeed, property division is an important divorce legal issue that couples must settle when they part ways. Of course, when people think of their marital property, they may think of their house, vacation cabins, automobiles, boats, furniture, and artwork, among many other valuable items. However, what divorcing couples should be aware of is that it is not just their marital assets that will be divided -- their marital debts will be divided too.
When it comes to dividing marital debt, it is important to proceed with care. Couples going through a divorce have a number of options for dividing marital debt. They may simply think that they can divide their debts 50/50 and leave it at that. They may even execute a settlement agreement stating who is to pay which debts. But, the story does not end there.
This is because creditors do not have to abide by a divorce settlement. What matters to them is simply whose name is on the debt. For example, even if the couple decided that one party would solely be responsible for the credit card debt, if that credit account is in both of their names and the party who took on the debt in the divorce fails to make payments, the creditor can go after both account holders.
There are some steps a couple can take to avoid these consequences. For example, if a couple is selling a high-value piece of property in their divorce, such as a house, they may use the proceeds from the sale to pay off their debts, so that the final balance is zero. Another option is for the party who is taking on the credit card debt to apply for a new card in their name only, and then transfer the balance from their joint credit card to the new, solely owned, one.
As this shows, while property division in California deals with assets, it also deals with debts. And, if debts are not handled properly it could have negative consequences in the future, even for the party who was not allocated the debt in the divorce. Therefore, it is important that couples going through a divorce take the time to understand how the division of assets and debts will affect them so they can do what is necessary to protect their interests.