Divorce will certainly reshape your financial landscape. You may end up with fewer or more assets and debts when you legally part ways with your spouse. One common concern among many is the amount of financial obligations they will be left to shoulder when the dust settles. Here is what you need to know.
Shared debts incurred during the marriage become a shared responsibility post-divorce. Mortgages, car loans, credit card debts and personal loans are among the most common shared liabilities. How much of the marital debt you will remain with depends on various factors.
Division of marital debt in California
California is a community property state, and the marital estate is divided 50/50 after divorce. As such, the debts you incurred as a couple will be split between you and your spouse. However, the court will abide by the terms of a legally binding agreement like a prenup or postnuptial agreement when dividing assets and liabilities.
Take charge of your finances
If you and your then spouse co-signed a loan or credit agreement, the responsibility for repayment remains joint after the divorce. Even if the divorce decree assigns one partner to handle specific debts, creditors can pursue both parties if the responsible partner fails to pay.
Protecting oneself post-divorce involves ensuring creditors are informed of the divorce agreement, outlining who is responsible for which debts. Freezing joint accounts or refinancing shared debts into individual names may also help minimize financial entanglements in a divorce.
Ultimately, the debt one remains with after divorce hinges on the nature of the debts, the specifics of the divorce agreement, financial transparency and the willingness of both parties to cooperate. Seeking legal counsel is crucial to navigate this process effectively and minimize the potential burden of debt post-divorce.