4 Factors Affecting The Division of Community Liabilities – When two people are getting divorced, the process of dividing community debts is treated the same as the court’s overall just and right division of the entire community estate. How that is accomplished, however, can depend on four key factors.
First thing’s first: If you didn’t get a chance to read our previous blog on dividing and confirming liabilities, we urge you to do so before moving forward with this blog. The previous article, the link to which is below, defines what liabilities are and the steps that must take place in order to reach a point where the court can render a verdict on the division of such debts.
Now that we got that out of the way, let’s get to the meat of this article. Whether a particular liability, or debt, will be assigned to a spouse can depend on several factors.
4 Factors Affecting The Division of Community Liabilities
1. Spouse’s ability to pay
Oftentimes, one spouse simply can’t pay for a debt. Their ability to do so is critical in the division of liabilities, particularly because the court’s assignment of a debt does not change a creditor’s right to proceed against both spouses. What that means in layman’s terms is if the court assigns debt to a spouse who cannot pay, creditor’s could come after the other spouse, resulting in the loss of community property through foreclosure.
2. Property securing debt
The court can consider which spouse was awarded the collateral securing the liability. In other words, the spouse who was awarded the home is also assigned the remaining mortgage. With that said, the court does have the ability to assign a liability to a spouse who was not awarded the collateral.
3. Relationship to creditor
Oftentimes, there is a relationship between one spouse and the creditor attached to a particular liability. For example, community loans borrowed from family. In this situation, a particular debt could be assigned to the husband because it was borrowed from his own family.
4. Party responsible for creating debt
It seems obvious enough that the court could consider assigning debt to one spouse if that spouse was the one who created the liability in the first place. This is a common practice.
We hope this blog was helpful. Please don’t hesitate to check our blog archive for more information on this topic or any others that might interest you. If you would like us to discuss a particular family law topic in these blogs, please contact our Nelson Law Group, P.C. office to let us know. We love hearing suggestions from our loyal readers.