Hidden Consequences to a Division of Debts in Divorce

By Donald A. Hayes, Attorney at Law

 


Hidden Consequences to a Division of Debts in Divorce

Hidden Consequences to a Division of Debts in Divorce in California must be identified. When a debt or obligation is divided by the family la court and awarded to one of the spouses. Regardless of which spouse was assigned the debt by the property division judgment, the debtor spouse remains personally liable for his or her debts incurred before or during marriage. In satisfying those debts, creditors may reach the debtor spouse’s separate property, as well as his or her share of the community estate received in the property division. Continue reading

How does the Court Divide a Negative Asset in a Divorce Case?

By Donald A. Hayes, Attorney at Law

 


 

The downturn in the real estate market has created new legal issues concerning what the divorce court will do to divide distressed real estate. One type of distressed real state comes to mind: “upside down property” where the mortgage balances exceeds the fair market value.

The question becomes should a party requesting that he or she be awarded an upside down property in the division of community property receive a credit for the property’s negative equity, or only receive the property at zero value.

When the entire estate is positive, but the real property is upside down, the Court is required to make a mathematically equal division of the parties’ community property assets and liabilities pursuant of the mandates of FC §2550. Continue reading

Leveraging Retirement Plans in Divorce Cases

By Donald A. Hayes, Esq. Attorney at Law

 


 

The divorce court has a duty under Family Code §2550 to divide the assets and debts of the parties in an equitable manner. As a general rule, the trial court is vested with discretion in selecting a method to effect distribution of the community interest in pension or retirement plans. The court may divide the pension awarding the non-employee spouse a community interest to be paid at the time the employee spouse retires; or it may order the plan to be valued by an actuarial expert to determine its present which often can be quite a large amount. Which method is adopted will vary with the facts in each case and the matter is left to the sound discretion of the court to apply which method which would reach a reasonable result. Continue reading

Methods of Division of Community Property other Than by Judicial Intervention

By Donald A. Hayes, Esq. Attorney at Law


 

 

There are alternatives to having the court decide who gets what in a marriage dissolution. You can do it yourself and control the process without having the court do it for you. Here are just some of the methods that can be employed.

An “in kind division” is where each party takes one-half of fungible assets such as bank accounts, stock, IRA accounts, etc. Another method is where the parties agree to “trade off” certain assets for others. This method is usually done without regard to value whereby one party simply agrees to take certain items of property and the other agrees to take other items of property, a kind of horse trade. Continue reading

The Impact of Obamacare on Divorce

By Donald A. Hayes, Attorney at Law

 


 

Losing health insurance following divorce is a significant problem for women. Many women do not hold employment outside the home, or work for employers who do not provide insurance. It is a fact that many couples who would like to get divorced simply stay together because of fear they will lose their spouse’s health insurance coverage and may not be able to get their own either because they have pre-existing conditions or simply cannot afford it on their own. Typically those people sought a legal separation rather than a divorce so they could stay on the spouse’s coverage. It worked until the spouse carrying the insurance wanted to get remarried, then the problem re-emerged anew. Continue reading

Timing is Everything When Divorce and Bankruptcy are Concerned

By Donald A. Hayes, Attorney at Law


 

The question is often asked, should I file my bankruptcy before I get divorced or should I get divorced before I file bankruptcy. Frequently people find themselves contemplating filing bankruptcy while they are at the same time embroiled in divorce litigation. This is caused because of the financial drain that goes with maintaining two separate households, while at the same time having much less income than was previously available before the marital break up. Also, there are lawyers bills for each side as well as child and/or spousal support to be paid, not to mention the pile of credit card and other debt which was accumulated during the marriage. Continue reading

Special Rules for Dischargeablility of Debts Created in Marital Settlement Agreements and in Divorce Judgments

By Donald A. Hayes, Attorney at Law


 

Until recently, debts incident to marriage dissolution and based upon a division of marital property could be discharegable in the debtor spouses Chapter 7 Bankruptcy. For example, Husband takes the former family residence with an equity value of $50,000 and is ordered to pay Wife $25,000 in the divorce judgment, Aas and for an equalization of community property and debts@. Now after the deed is conveyed to Husband and Wife no longer has title to the property, Husband files a Chapter 7 Bankruptcy seeking to discharge the $25,000 debt to Wife. Continue reading

Breach of Martial Fiduciary Dutites and Their Consequences

By Donald A. Hayes, Esq. Attorney at Law


 

In California each spouse owes a statutory fiduciary duty in transactions between themselves and in the management and control of the community property. That duty is codified in Family Code §721 and §1101. A fiduciary duty is a duty arising to the level of the highest good faith and fair dealing imposed upon those occupying confidential relations. The fiduciary duty is not unlike the duty imposed upon non-marital business partners, investment advisers, attorneys, accountants, and other professional relationships. Continue reading