Community Liabilities: 2 Methods to Accomplish Just and Right Division – We learned in our previous two blogs what liabilities are and how the court goes about identifying and placing a value on those debts. We also learned each spouses’ role in the process and the factors could influence how a court assigns debt to each spouse. Once there are no more obstacles in the way, the court can settle in and begin dividing everything fairly.
This article discusses the two methods a court will use to accomplish a just and right division of community liabilities.
Partition in Kind – Community Liabilities
The most common way to divide community liabilities is to partition in kind. To partition in kind simply means dividing everything based on what the court feels is fair. This can be done by:
Assigning liability to one spouse
A court can assign debt to one spouse and make that spouse solely responsible for its payment. So for example, a judge may rule that it is only fair based on the circumstances of the case, et cetera, that one spouse be responsible for paying the mortgage. The only downside is that using this method does not keep a creditor from demanding payment or foreclosing on community property that was awarded to the other spouse.
Ways to protect the non-owing spouse include:
- The court can order the spouse assigned the liability to hold harmless the other spouse if the liability is not paid.
- The parties can agree on refinancing a debt to get it in one spouse’s name as opposed to the other.
- Each spouse working together to make an arrangement with the creditor.
Assigning liability jointly to spouses – The court can also make each spouse responsible for part of the liability. For example, the court could order one spouse to pay 60 percent of the mortgage while the rest is paid by the other spouse.
Order Discharge by Sale
If partitioning in kind isn’t the best method, a second approach is for the court to order (with or without the parties’ consent) the sale of community property to pay off the community debts. For example, a husband and wife could be ordered to sell their real property and use the proceeds to pay their federal income-tax debt.
It should be noted that forced sales of community property are appropriate only when the court has explicitly found that the property cannot be partitioned in kind.
We hope this blog was helpful. Links to our previous two blogs on community liabilities are below.
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.