Debt Distribution: How Does the San Diego Superior Court Divide Debts in a Divorce or Legal Separation in 2014?

Whether your case is a divorce or legal separation in the Superior Court of San Diego, the debts from the community will, normally, be divided one half each. This does not mean, however, that each party will pay one half of each debt and, in many cases, there is an equalization. For example, one spouse may be responsible for paying the community property debt on an American Express and VISA card and the other spouse may be responsible for paying on a Mastercard and Discover. If the amounts of the community property debt on the credit cards are the same, then there is no equalizing payment. If the amounts of the debt are not the same, then there is an equalizing payment. If both names are on the account, then [if possible] best to have paid in the judgment so that there is no continuing liability for the debt since the creditor is not bound by the San Diego Superior Court judgment since the creditor is not a party to your family law case. In many cases, the debt goes with the asset. For example, a spouse who is being confirmed the community residence would also take the debt with the residence. Again, if both spouses are obligated under the loan, then the property will need to be refinanced since it is not advisable to owe and not own as this may negatively impact your rights. The division of debts in a family law case can be very complicated and needs proper analysis.

For almost all community debt, the normal procedure is one half each. As above, this is more complicated than it seems. In many cases, the debt goes with an asset but not always. In a marriage settlement agreement, there are exhibit pages. It is common to have an exhibit with the division of debts which “confirms” each date to each party in the judgment. In this way, there is no disagreement in the future. Make sure, before you sign your MSA, that you completely understand your responsibilities and your rights. It is also very important to have correct and accurate numbers for the debt as of the date of marriage and as of the date of separation. Post separation community debt payment is not addressed in this article but can make a significant difference in what is, often, referred to as an Epstein credit.

Some debts are not divided one half each. One example is if your case is a negative asset case. If this is factually correct, then the Judge has the authority not to divide one half each and can divide in relation to income or assign all debts [and all assets] to one spouse. In addition, if there is a breach of fiduciary duty, then the Judge has the authority not to divide the debt one half each. In addition, if there is a student loan, California would [unless more than 10 years old] have the one who took out the student loan pay back 100% even if the student loan occurred from the date of marriage to date of separation.

The law firm of Doppelt and Forney, APLC has experience is representing clients in San Diego Superior Court for division of debt. Their law office would be pleased to offer you a complimentary and confidential consultation up to 300 minutes to discuss your individual case and can help in all areas of family law.