Who is liable for debts after divorce in Louisiana?
When people think about dividing their shared property after divorce, a few familiar questions often spring to mind: Who will keep the house? Who gets the car? How will we divide our savings? But another question that divorcing spouses should ask themselves, particularly in this era of widespread financial distress, is how their debts will be divided. As with many other aspects of divorce, the answer to this question varies according to state law.
Debts and divorce in Louisiana
In Louisiana, like a number of other states, divorce law uses a system known as “community property.” In a community property state, all of the debts and assets acquired by either spouse during a marriage are considered equally shared by both parties – even if they were acquired by one spouse acting alone. Thus, when a couple files for divorce in Louisiana, their debts and assets are typically split down the middle.
As a result of this law, a divorced spouse in Louisiana can potentially be left on the hook for debts accrued by an ex during the marriage, even if he or she was not a co-signor on the debt. In fact, in a community property state like Louisiana, people can be liable for a spouse’s debts even if they were not aware the debt existed. For instance, if a person secretly racked up $10,000 in credit card debt during marriage, his or her spouse could be held responsible for half that amount – $5,000 – upon divorce.
If the debt itself cannot be divided easily between the parties, a judge may assign the entire debt to one spouse and decrease the other spouse’s share of the marital assets by an equivalent amount. However, because creditors are not bound by the terms of a divorce order, bill collectors may still try to collect from the other spouse if the party responsible for the debt fails to keep up with the payments.
Protecting against an ex’s debts after divorce
To guard against the risk of liability for the debts of an ex, it is often advisable to pay off all marital debts as quickly as possible upon divorce. For certain debts like a home mortgage or car loan, if selling the property or paying off the debt is not feasible, it may be possible to refinance the loan in only one party’s name. Another option, if a debt is assigned to one spouse during a divorce, is to request that a lien be placed on that spouse’s separate property in order to secure payment of the debt.
For more information about dividing debts and assets during divorce in Louisiana, or for assistance negotiating a divorce settlement that meets your needs, contact an attorney with experience in divorce and property division cases.