San Diego Financial Problems and Divorce in 2012

For many couples today, financial problems are one of the triggering factors in a separation or divorce in San Diego. One spouse’s spending habits or purchasing decisions may be blamed for financial challenges whether or not they were at fault or only made a wrong choice. Unemployment can lead to depression and low self-esteem on one side and accusations of laziness on the other side. Given the high rate of unemployment in San Diego and the increasing financial pressures on couples, it is important to understand the dynamics of this issue.

Financial challenges increase stress in any marriage. And marital conflict can add to financial challenges, especially if one or both spouses use finance as a weapon. For example, some people go on a spending spree to “get even” for something. Others use shopping to boost self esteem or take expensive weekend trips or hobby activities to avoid the other spouse. Some go gambling and try and escape and others use drugs. Some go on vacations by themselves just to try and get away for a time. All of these can result in large credit card debt which can increase the stress and not reduce it in the long term or, in many cases, even in the short term.

An essential first step is to sort out the problems and stop letting one set of problems feed the other as much as possible. Divorce may not be the solution for ongoing financial problems. As a rule, divorce has a negative financial impact on both parties, especially over the short term and also can have severe detrimental effects over the long term.

In a divorce, both assets and liabilities are divided between the parties in accord with the law in San Diego. Most California divorce settlements provide for an equal division of both assets and debts, unless the parties have agreed otherwise or there is a family law code which is an exception to the equal division such as a gift or inheritance or student loans and some others.

In cases facing financial challenges, there are common issues that add to the complexity of a divorce. For example, one party may conceal or undervalue assets, such as cash, jewelry or collectibles. Since another common practice among people facing financial challenges is to ignore bills, bank statements, and receipts, it may be easy for one party to make purchases and transfers without the other party’s knowledge. Once the divorce pleadings [petition and summons] are filed and served, then there are automatic temporary restraining orders which can give protection. In addition, this also establishes the date of separation for on going assets and debts.

Another common issue occurs after the divorce and property settlement have been finalized. While the divorce court can assign responsibility for a mutual debt to one party, the other party may still be held legally liable for the debt if the first party doesn’t pay. Consequences can range from a damaged credit rating to wage garnishment. While it is possible to seek a citation for contempt against the non-paying spouse, it may be of little effect if the spouse has become unemployed or declared bankruptcy. It is also important to understand that, while the parties may divide debts as they would like, the creditor is not bound by the divorce judgment since the creditor is not a party to the divorce action unless joined.

If bankruptcy seems imminent and unavoidable, it may make more sense to make a joint declaration while still married than to do only one or separate bankruptcies after a divorce. Tax issues can also arise after a divorce has been finalized, so if you suspect there may be future problems, such as disallowance of questionable deductions in your spouse’s business, let your lawyer know. As such, it is very important to consult with both an experienced bankruptcy attorney and an experienced family law attorney. Some attorneys practice in both of these areas of law and it would be ideal to find an attorney experienced in both so that appropriate strategies can be discussed which will have impact on both the divorce in San Diego Superior Court and the bankruptcy in San Diego Federal Court.

It is vitally important to let your divorce attorney know all the financial facts. You and your spouse will both be required to make full financial disclosures to the court, especially in determining property settlements, child support and spousal support. There are serious legal consequences for deliberately concealing assets.

Your knowledgeable San Diego divorce lawyer can help you sort out the legal and financial issues in your divorce. For a free initial consultation, contact us online or call our office at 858-312-8500.

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