This article is part five of a series concerning dividing community property in Louisiana as part of divorce. This article presents dividing debts.
Community property encompasses both assets and debts. In a divorce situation, where the debts are outweighed by the assets there is a huge risk of bankruptcy. But this article is limited in its focus just to who will take what debts. The procedure for allocating community obligations is the same as that of property and it generally takes place during the process of dividing the property. Understanding how debts are allocated in a community partition can be crucial in that a good use of this law can have great upside in a family law case.
To begin from the broadest law regarding debt of spouses, Louisiana law defines all debts incurred while community property exists between the spouses will be community as long as they were for the benefit of both or for the benefit of the other spouse. This includes things such as taxes and business debts. Things that may go either way are criminal activity, fraud, and gambling debts. Also, alimentary obligations (such as paying for hospital expenses for a family member) can be deemed to be a community obligation. One spouse, however, will not normally be held responsible for the other spouse’s child support obligations born from another marriage or different relationship.
Most spouses going through a divorce are not aware that their attorney’s fees will generally be considered to be a community property obligation. What this means is that you will likely have to pay half of the attorney’s fees that your spouse incurs during a community partition. This obligation generally ends at the point of divorce.
What is not clear, to this author at least, is if the spouse’s obtain a judgment of separation pursuant to Civil Code article 2374, will this end the obligation to pay for in part the other spouse’s attorney’s fees. Generally a judgment of separation ends community property between the parties. This being said it cannot end certain things such as interim spousal support. If this is so, this puts a lot of pressure on parties and their attorneys to resolve all matters that are incidental to the marriage prior to the judgment of divorce. For the sake of the relationship between the parties, it is almost always beneficial to end the adversarial litigation sooner rather than later. (It should be noted that the Civil Code simply allows for attorney’s fees for the divorce, though courts have frequently included attorney’s fees for incidental actions, even for things such as protective orders.)
Separate obligations are generally ones that are incurred before a community between the spouses is established. It can also be one that a spouse incurred but was not to benefit the family or the other spouse. Also, obligations that are incurred as the result of an intentional wrong or an obligation for the spouse’s separate property will also be separate if it does not benefit the family or the other spouse.
Will Beaumont is a lawyer in Metairie & New Orleans. This article is strictly informational and not legal advice.
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