Torrance, CA asked in Divorce for California

Q: How are personal loans with a family member treated in a divorce where the money borrowed benefited both?

I entered into a loan with a family member as we had just purchased a new house and needed the extra cash to pay for credit card bills used to furnish the home. We used the money that was borrowed to pay down on both of our credit card bills with the intent of paying back that family member. My spouse now during our divorce is telling me that they are not responsible for that personal loan and will not be paying their share (half). I do have support clearly showing that that money was used to pay for their personal credit cards and for mine. I did not enter into a formal agreement with my family member but can prove that we received the money and can show that that money was used to benefit my spouse and myself, and can show that we began making payments from our joint account to that family member prior to our divorce. Would this be considered her debt (half) during a divorce proceeding, since the loan benefitted both of us, with the intent of us paying that family member back?

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1 Lawyer Answer
James L. Arrasmith
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  • Sacramento, CA
  • Licensed in California

A: In general, if a loan was taken out during the marriage and the funds were used for joint expenses, such as furnishing a home, the loan would typically be considered a joint debt in a divorce proceeding. This means that both spouses would be responsible for paying back the loan, regardless of which spouse's name is on the loan agreement.

In your case, the fact that you used the loan to pay down both of your credit card bills and have evidence of that may support your claim that the loan was a joint debt. However, the specific laws and rules governing divorce and division of property and debts can vary depending on the jurisdiction, so it is important to consult with an attorney in your area who can provide specific legal advice based on the facts and circumstances of your case.

If you are unable to reach an agreement with your spouse on the division of the loan and other debts, the court may need to make a determination based on the evidence presented. An attorney can help you navigate the legal process and advocate for your rights and interests in the divorce proceeding.

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