Do you have to sell the house to pay off debt during a divorce?

On Behalf of | Jul 22, 2022 | Divorce

One common question asked during the divorce process has to do with a family home: must you sell it to satisfy marital debt, or can one spouse retain ownership? To find an answer, you must first understand how California addresses marital property.

Community Property

California is a community property state, meaning that the state considers all property acquired by either spouse during a marriage to be the property of both spouses. Property owned by one spouse before the marriage, in the absence of special conditions, also becomes community property.

Community Debt

In the same vein, all debt accrued by one spouse is also considered the debt of both people. For instance, during the marriage, Calfirnoia allows garnishing the wages of one spouse to satisfy the debt of the other.

Keeping the House

There is more than one way for one spouse to retain ownership of a home after a divorce, even if there is also debt involved. Some of these ways include:

Negotiate a settlement with your spouse

Skip the judge and negotiate an amicable agreement with your spouse that satisfies the ownership and debt issues. Creatively solving your problem may help you get what you want.

One spouse buys out the other

If one spouse buys out the other’s interest in the home, that home becomes sole property for the buyer.

Defer the sale

You may agree to retain joint ownership and defer the sale of the home. This is a common solution for couples with children, as it ensures continuity for them.

You can keep the house, even if you have debt. California’s community property laws may mean you and your spouse will have to cooperate to do that.