People in California who are married and make the tough choice to get divorced might wonder how the state’s laws about community property might impact their divorce. Some may feel this could be a good thing for them as it means assets obtained during the marriage might be equally owned by and divided between both spouses. While this may be true, it is also true that the debts incurred during the divorce may be viewed as equally owned and thereby divided equally between both spouses.
As explained by Money Management International, credit card debt can plague divorced spouses if they do not manage it properly from the beginning of their divorce. If it best for a couple to cancel or freeze their joint accounts from the outset of their separation or divorce. This prevents any further debt from being amassed. It is also wise for a couple to pay off joint debt before they finalize their divorce.
For any debt that remains, each spouse who accepts responsibility for the amount owing should ideally transfer that debt to a new account in their name only. This is the case with mortgages as well.
According to Clearpoint, if a mortgage remains in both spouse’s name, the bank may pursue collection from both parties regardless of who the divorce decree states is responsible for repayment. Any missed or late payments by that spouse may also appear on the credit report of the other person, making proper care with a home loan essential for every homeowning spouse.