DEBT PAYMENTS

Many people going through a divorce case in California have to deal with the issue of dividing the debt that was charged up by the parties during their marriage. This is usually the case where there has been substantial amount of credit card debt that was charged up by the parties during the time that they were married.

California community property law clearly states that all assets and debts must be equally divided by the Court in a divorce case. So if there is $10,000 dollars of outstanding credit card debt at the time of separation, each person will be required to take $5,000 of the debt.

A common situation will occur where after the separation of the parties but before the final date of the divorce case, one or both of the parties will continue to make payments on the previously existing community debt.

This means that they are spending their post separation separate property money to pay a debt that was charged up during the marriage. For example, after the couple separates and starts their divorce, one of them pays a total of $500 in payments on a credit card that had a $1,500 balance at the time of separation.

At the time of trial, the card now has a $1,000 balance. The party who paid the $500 in payments may now ask that the Judge order the other spouse to pay them $250 to reimburse them for their half of the community debt obligation that the first spouse paid. This is know as an Epstein Credit, after the name of the couple in the California Supreme Court decision where this rule was first published.

This can often be a rather tricky issue in a dissolution case. Please consult an experienced Family Law Attorney if you are dealing with this kind of issue.