Division of debt in community property states can be tricky

Louisiana residents may be aware that when it comes to property division in a divorce, their state is a community property state. What does this mean?

Assets acquired during the marriage are considered community assets over which both parties have an equal claim. This also means the same law applies with regards to debts — the debts accrued during a marriage are considered community property. This is different than non-community property law states, where the responsibility stays with the person who accrued them.

Couples collect a number of things together during a marriage, but if one spouse is using the credit card more often and running up the credit card bill, it may not seem fair that both parties have to share the burden of paying it off. One way to avoid the mess of a trial is by coming to an agreement out of court, as to how debts and assets will be divided. One compromise could be one party agreeing to take on more of the debt, as well as more of the assets. If the matter goes to court, then the applicable laws will be applied, unless one spouse can demonstrate that the debt benefited only one party, not the household.

In reality, the creditors do not care what a divorce decree says or what divorcing couples agree to — they turn to the person with whom they have an agreement and come to collect from them. This means if a party is not making the payments they were supposed to, it could be ruining the credit of the person the debt is allocated.

Some ways to be proactive is by removing authorized users from one’s accounts and deciding who will keep the joint account and who will be removed from that account. Paying off or transferring debts before the divorce takes place can also be beneficial, as the debt would be in the name of the person the parties agree will be responsible for paying it off.

Going through a divorce is difficult as it is — worrying about ruining one’s credit score can simply make moving on difficult in the long run. Having an experienced negotiator, well-versed in family law issues, by one’s side can ensure one’s best interests are being put forward.