What happens in a case of shared debt?

What happens in a case of shared debt? For instance, if one spouse started a business during the marriage and lost money, are both of the spouses equally responsible for that debt?

By John Harding
May 11, 2014
CA FAQs/Debt, Credit, Bankruptcy

Yes, that's the general rule in California and that goes back to the idea of community property. It is not just assets that come within the definition of community property; it's also debts. And just as assets are presumptively divided 50/50 at divorce, so, too, are debts.

Now, there are certain specific exemptions to that, one example-the strongest example-being student loans. But the general rule is that debt is going to be allocated 50/50, unless that 50/50 would work in extreme and rare hardship upon one of the spouses.

John Harding is the principal of the law firm of Harding & Associates in Northern California. He practices family law litigation and divorce mediation exclusively.

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May 11, 2014
Categories:  Financial Issues|FAQs

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