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Dividing student loans and other marital debt in California

| Dec 7, 2016 | Divorce |

When family law judges are called upon to make property division decisions in divorce cases, they follow either equitable distribution or community property rules. In community property states like California, marital assets must be divided equally no matter how long the couple was married. Judges in equitable distribution states have more flexibility, but their rulings are still expected to be essentially fair.

California’s community property laws can make divorce negotiations challenging, and this may be especially true when discussions turn to liabilities like student loans that generally benefited only one of the spouses involved. Student loans taken out before a couple married are considered separate property and are not subject to division, but financial obligations entered into after spouses have walked down the aisle must be divided.

Debts are often a thorny issue during a divorce, and spouses should be aware that lenders could pursue them for arrears even if they no longer have possession of the assets the loans in question were used to purchase. Debt collectors are rarely deterred by divorce settlements.

Spouses who know that a family law judge will order marital assets and liabilities to be divided equally may be less flexible during property division negotiations, and this can make reaching an amicable agreement challenging in states like California. When talks break down, experienced family law attorneys may suggest alternative venues such as divorce mediation or arbitration to avoid the costs and publicity of a civil trial. Attorneys could also suggest prenuptial or postnuptial agreements to couples who wish to avoid bitter and lengthy legal battles should they choose to divorce.

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