In this segment, we will discuss how debt in one spouse’s name is generally presumed by the public to be the sole and separate obligation of that spouse and how that presumption is often wrong.

In assessing whether a debt obligation in one spouse’s name is truly just the responsibility of that spouse, we first must look at the timing of the debt. Was that debt obligation incurred before the parties got married, during the marriage, or after the parties separated? With California being a community property state, the presumption is that if a debt was incurred between the date the parties got married and the date the parties separated, that debt obligation is community in nature. Therefore, each party is equally responsible for that debt, regardless of whose name(s) the account is in. Conversely, if the debt was incurred by a party either before the wedding date or after the separation date, it is presumed that the party that racked up the debt is solely responsible for that debt as their separate obligation. These
presumptions arise whether the debt account is in one spouse’s name or held jointly between the spouses.

e.g. A husband and wife have a joint credit card with a nominal balance at the time the husband files for divorce. The husband then takes that credit card with him to Las Vegas and spends $16,000 on the credit card while being out of town. The husband incurred the debt after separation and the Court will hold him responsible for the $16,000. Note: The creditor (credit card company) will not be bound by the Court’s allocation of debt and can go after either or both spouses since the creditor has an agreement with both of them.

In addition to determining the timing of the debt, we must also look at what was the purpose of the debt (i.e. what goods/services/etc. were obtained in incurring the debt). A general rule is that if the debt was not incurred to benefit the community (both spouses), then it will be allocated to be the separate property of the spouse incurring the debt, even if it took place during the marriage.

e.g. The husband has a credit card in his name and takes an $8,000 cash advance against the account to send money to his sister in Mexico City, without his wife’s consent. Regardless of when the husband took the advance, the debt incurred for a purpose that most likely only provided a benefit to his (extended) family and the presumption is that, as such, the husband will be solely responsible for the $8,000 as his separate obligation.

Money problems are one of the most common sources of marital discord. However, every couple’s situation is different, with many possible pitfalls and misconceptions on the road ahead. As such, always consult with an experienced family law attorney before taking any legal action.

The Law Offices of Ian S. Topf, A.P.C. offers a free consultation on a variety of issues, ranging from family law, bankruptcy, debt collection defense, estate planning, criminal defense, DUIs, and general civil matters.