California couples seeking a divorce may be anticipating having to divide their assets, but what they may not realize is that they also must divide their debts. And, when they do so, they must take care to do it properly, or there could be financial consequences.
It may seem simple enough. Add up all your debts, and then divide the total 50/50. For example, one spouse could take 50 percent of the credit card debts, and the other spouse could take the other 50 percent of the credit card debts. However, even if the spouses agree to this arrangement in writing, the creditors involved need not honor that agreement. If both spouses’ names are on the debt, and one spouse fails to pay what he or she is supposed to, the creditor can go after the other spouse, even if the spouses have a written agreement between each other that says the defaulting spouse is the one liable for the debts.
There are some ways to avoid these pitfalls. If real property, such as a family home, is sold, then the parties can choose to use the funds from the sale to pay off their debts. Or, if one party does decide to keep a credit card, he or she can get a new credit card solely in his or her name, transfer the balance from the joint credit card to the new credit card, and then close out the joint account.
In the end, when it comes to the division of debts, just like the division of assets, it can help to have the assistance of an attorney. Not only can an attorney explain the legalities of property division, but they can also represent their clients throughout the negotiation process, or even in court if necessary.