The division of property and debt is one of the biggest matters that has to be resolved in a divorce. Spouses may decide how they want to divide their assets amongst themselves, but they might not know where to start.
The first thing that divorcing spouses need to do is determine which of their assets are community and separate, as well as determine the fair value of every item. The spouses already have to fill out and the exchange Form FL-142, Schedule of Assets and Debts, as part of their financial disclosure during the divorce. After filling out the forms, the spouses can compare them for discrepancies and to see if they agree on the contents.
Next, the spouses can make a plan on how they want to split community property and debt. This should be done in such a way that each of them gets around an equal net share. Sometimes, however, there are special circumstances that require more caution.
For example, spouses who have credit card debt could split the responsibility of repaying that debt to balance the division of assets. They may decide that while one pays one account, the other pays another account. However, if the credit accounts have both of their names on them, the creditors could go after both spouses if the payments are neglected. One way for a divorced spouse to avoid being held liable for the ex’s shortcomings is for the accounts to have only one name on them.
A successful negotiation of property division still requires court approval before it is finalized. Spouses who do not agree on property and property values, however, might seek help through financial mediation. Legal counsel might help a spouse obtain a fair division.
