Any person who lives in California and has agreed with their spouse to get divorced will have to face the difficult process of splitting up their marital estate. This means that not only will they have to work through negotiations for their belongings and other assets but for their debts as well.
SoFi explains that California is a community property estate so most debts may be viewed as the equal responsibility of both spouses. There are nuances that can change that determination, however. Some might assume that if a debt is in one person’s name only, it still remains their sole responsibility but that may not be. A student loan taken out during the marriage might be a joint responsibility if the money was used to pay rent, for example.
When it comes to mortgages, homeowning spouses will quickly learn why so many divorcing couples sell their homes. If one person wants to stay in the house, they really should get a new mortgage in their name only. This is the only way to avoid future financial liability for the other spouse.
What’s the harm in keeping a joint mortgage if the divorce decree says that one person should pay it? Damaged credit can result for both parties if the spouse supposed to make mortgage payments fails to do so. A bank may also pursue repayment from anyone listed on the loan even if one party has signed a quit claim deed and no longer has any ownership in the property.