Property and debts in a divorce

Part of your divorce involves dividing your property and debts and getting a formal order from the court about these issues.

A judge has to approve how you’ll divide your property and debts 

Part of your divorce involves dividing your property and debts. Property is anything you can buy or sell or has value. For example, a house, car, or furniture. It’s also things like a bank account, pension, 401k, or stocks.  

Even if you divided everything informally when you separated, a judge still needs to make a formal order about these issues. This doesn’t mean you have to go to court. A judge could formally approve an agreement you and your spouse write up. If you can't decide, a judge can decide for you at a hearing or trial.  

Until you have a court order, any property or debt from your marriage still belongs to both of you. 

This is true no matter who is using it or who has it with them. The same is true of debts.  

California divides property into two categories

To tell the judge what you want to happen, you'll need to understand some legal terms and some California property law. You’ll see terms like separate and community property on many court forms. These are important to know because this is how a court will decide how to divide your property. In general, you keep your separate property and split your community property.

Community property

Community property: What you own or owe together during your marriage 

If you lived outside California for part of your marriage, then you both moved to California, what you earned or debts you took out during that time are called quasi-community property. This property is treated like community property. 

Separate property

Separate property: What you each own or owe individually from before you married or after you separated, and any gifts or inheritance

Community or separate? You need to know your date of separation 

You need to know when you married and when you separated to figure out what's separate property and what's community property. The day of your marriage is generally easy to figure out. Separation can be trickier.   

Date of separation

  • The day that one of you let the other one know (by actions or words) that they wanted to end your marriage  

  • After that day, your or their actions were consistent with wanting to end your marriage 

For some people, this is the day they moved out. For others, this is a day the two spouses agreed together that their marriage was over, and they made plans to divorce. Generally, from that day forward, what you or your spouse earned or loans you took out were no longer community property.  

How to tell when something is community property 

Generally, this is what either of you earned (or debt you took out) after you married, but before you separated. The “community” is you and your spouse. The property belongs to you both equally.   

Community property is: 

  • Anything you earned while married 

  • Anything you bought with money you earned while married 

  • Debt you take on while married 

Property you didn’t earn, like a gift or inheritance one of you received while married, is not community property.  

Generally, a loan to pay for one spouse's education or training (student debt) is treated like that spouse's separate property. After you divorce, that spouse will be responsible for their student debt. In some cases, if you used community money to pay down a student loan, the spouse who didn't get the education can get reimbursed for their share of community money spent on the other spouse's education. Talk to a lawyer if either of you have a lot of student debt.

You may have more community property than you realize. Many people don’t think about retirement or pension plans. You have the right to part of the money in that plan if any of it was earned during your marriage.  

You may have more community debts than you realize. Your spouse may have debt in only their name that you don’t know about. Usually, these debts belong to you both. 

  • Example: home mortgage

    If you took out a mortgage to buy a house while married, that debt is community property. You’re both responsible for it.  

  • Example: car 

    If you bought a car with money that only you earned while married, the car is community property even though the money used to pay for it was earned by you and not your spouse. It doesn't matter if only you drive it.

How to tell when something is separate property 

Generally, separate property is: 

  • Anything you earned or owned (or a debt) from before you married or after you separated 

  • Anything you buy with separate property or you earn from separate property 

  • Gifts or inheritance (to one of you) even if it was given or inherited when you were married 

If you have separate property, it belongs only to you, as long as it was kept separately. Kept it separately means you didn’t give it to your spouse.

  • Example: Car before you married

    You had a car from before you married. You got married. You sold the car and used all that money (and no other money) to buy a different car. That car is your separate property even though you bought it while married.  

  • Example: vacation after separation

    After you separated, you went on vacation and charged the vacation to your credit card. This is your separate debt.

Sometimes property is part community, part separate 

Property can be part community and part separate. This is called commingling. This just means that separate property and community property got mixed together.  

This often happens with big purchases, retirement plans, and bank accounts.  

  • Example: Down payment for a House

    One spouse uses money they earned before they married as a down payment on a house. The down payment for this new house is separate property. The married couple uses money they’re earning to make the mortgage payments. This means the payments are made using community property.  The equity (value) resulting from paying down the house loan is community property. The equity in the house is now part community and part separate property. 

  • Example: Retirement Plan

    One spouse has a retirement benefit from a job they had since before they married. The contributions made to the plan before the marriage are separate property. The contributions made while married are community property. After they separate, the new contributions are separate property.  

How to divide your property and debts 

In general, after a divorce, a judge would order that you: 

  • Keep your separate property 

  • Divide your community property equally 

You and your spouse can agree to something different if you both think it’s fair. But, if you do not agree that’s usually how a judge will divide your property. 

When property is complicated, talk to a lawyer for advice 

The property and debts part of a divorce can be complicated, especially if you have anything of high value or a lot of debt. You may want to talk to a lawyer before you file or sign any property agreements. You can consult a lawyer just to help with the property and debts part of your case.   

Some reasons to talk to a lawyer: 

  • You disagree about what to do with a house or business you own 

  • You have a lot of debt, you may even be facing bankruptcy 

  • You signed a prenuptial or postnuptial agreement  

  • Your spouse took out debt or bought something for someone without your knowledge (like a gambling debt or used your community money for a relationship with someone else) 

  • If either of you has a retirement plan, especially a pension 

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