If you have ever found CNBC on television, they have this show called, Til Debt Do Us Part. It’s a great show where the host, Gail Vaz-Oxlade takes a tough love approach to helping couples get out of debt and on the road to financial recovery. I would say that if your marriage can survive through these tough economic times, then you will make it through anything; together.
Unfortunately, with money being a primary motivator for divorce, many couples are faced with the decision as to whether to file for bankruptcy or divorce first. My answer will always be on a case by case basis with couples. I will always support couples to stay together and that money does not have to break a marriage apart. However, some marriages may have needed to be ended some time ago and a financial crisis may serve as the perfect issue to end the marriage with.
Because California is a community property state, all property acquired during marriage is community property, while property acquired before marriage or after permanent separation, or by gift or inheritance, is separate property. The characterization of an asset as community property or separate property depends on three factors: (1) the source of the item; (2) action of the parties which may have altered the character of the item; (3) any statutory presumptions affecting the item. This means, in general, is that all your assets and all your debts belong to the community and are shared equally between spouses.
So, if you’re in a marriage that is facing insurmountable debts and you are trying to determine whether to file for divorce or bankruptcy first, then you will need to consult with your local bankruptcy lawyer. Your local bankruptcy lawyer will conduct an extensive review of your marital assets and other information, to determine the right strategy for you.