Getting divorced in California, or anywhere else for that matter, typically brings the inevitable dividing of assets, which can be a never-ending fight. However, it also brings the division of debts. Many couples run into Divorce Court and get approval to divide their debts according to their agreed upon division without realizing that a Creditor must agree or it is not binding as to that particular Creditor.
Everything is fine, of course, as long as the divorced individuals keep making their payments. But, what happens when one person declares Bankruptcy or otherwise defaults on their debt payments? The creditor will look to see who is on the agreement, the ex-husband, ex-wife, or both. If both parties are on the agreement, then the creditor can go after either individual for the full amount owed! The fact that the Divorce Court has authorized the division of debt means absolutely nothing to the creditor unless that creditor has agreed otherwise. The obvious question becomes why the creditor would agree to let one of the parties off the hook, when they have no obligation to do so.
As a result, when a couple has more debts than assets, it can be wiser to file the divorce and bankruptcy at the same time. In this way, the joint debts can be discharged without worrying about whether your Ex is going to keep making their payments or not when you have not control over them. Ideally, this situation is best handled by an Attorney who performs both Family Law and Bankruptcy Law. Remember, Joint Debts survive Divorce until fully paid!
