Community Property States vs. Common Law Property States
When couples are happily married, labels of ownership are not typically placed on all of their possessions. So, when that same couple goes through a divorce, they are tasked with dividing up all the things that they acquired during the length of their marriage. Part of this allocation of property also includes dividing their debts.
Since it is not always feasible or practical to pay off all debts jointly before getting a divorce, courts are tasked with distributing debt to each spouse. Deciding how debt will be divvied up is an important consideration. To do so equitably, courts will take into consideration a number of factors.
Each State is Different
Divorces are granted at the state level. So, state laws will govern how courts can view a couple’s property as they begin the process of dividing it between both spouses. Although each state has their own set of laws, generally a state is regarded as either a Common Law Property State or Community Property State.
Understanding the difference between the two is key in determining how a married couple’s debts are treated during a divorce. Always consult with an experienced divorce attorney who can explain your specific state laws to you and advise you on what to expect as the process of allocating debts and assets begins. With an experienced family law attorney on your side, you can ensure you end up with a divorce decree that fairly and equitably distributes debts.
Common Law Property States
With few exceptions, common law states will view debt incurred only in one spouse’s name to solely be the responsibility of the named spouse. After a divorce, the debt would remain in their name and become their obligation alone to pay off. However, debts acquired for family necessities, like food, shelter, and utilities, are often looked upon as joint debts in common law property states, even if it is only in one spouse’s name.
In common law property states, judges will also consider how long a couple was married and the financial health of each spouse when determining how debt will be divided between them. The majority of states are Common Law Property States and will consider each couple’s unique circumstances when distributing debts as part of divorce proceedings.
Community Property States
Just nine states are considered to be Community Property States. In these states, all assets acquired during a marriage are considered to be jointly owned by both spouses regardless of who actually obtained them.
It is important to note, even in community property states, debts acquired before a couple married remain the responsibility of that spouse. For example, student loans taken out or credit card debt incurred before a marriage would ultimately need to be paid off by the spouse who originally acquired the debt.
Remember, even Common Law Property States and Community Property States have their own sets of laws with individual nuances which will determine how debt is ultimately distributed between each spouse. If you have questions about how your state treats debts during divorce, contact an experienced family law attorney for advice.