People sometimes underestimate the complexity of community property division. They approach the process with an assumption that a simple 50/50 split of every jointly-owned resource is mandatory.
However, there can be many different factors that influence the outcome of the community property division process, including the debts owed by the spouses. The marital estate consists of not just shared property but also shared financial obligations. Assets and accounts in the name of one spouse may be part of the marital estate.
Disagreements about marital debts can lead to intense conflict during divorce negotiations. What disagreements do spouses often face when the marital estate includes debts?
Which debts are marital
Perhaps one spouse regularly lied about their financial activity, and the other was unaware that they had multiple credit cards with high balances. Maybe one spouse has student loans and expects to include them in the property division process.
Spouses may end up arguing over what debts they share and which ones remain the separate obligation of one spouse. Most debts taken on during marriage are part of the marital estate, but there are special rules for student loans.
How to divide the debts
Some people want their spouses to take responsibility for as much of the debt as possible. They may have failed to consider the possibility of bankruptcy or a default putting them at risk of collection activity later. Other times, one spouse wants to pay off the debt using marital property, which can lead to conflict.
An appropriate approach to shared debts can make it easier for people to rebuild financially after a divorce. Spouses preparing for divorce may need help evaluating their finances and setting reasonable goals for the process ahead, and that’s okay.