In divorce proceedings, California courts generally have the authority to divide the community estate equally between the spouses. The community estate includes assets and debts that have been accumulated throughout the marriage, with certain limited exceptions. As one can imagine, there are many factors that can complicate this stage of the process, such as disputes over the character of alleged “marital” property. Another issue concerns the effect of a bankruptcy filing by one of the spouses: what then happens to the remaining assets? Are they still divided evenly? For any questions concerning the division of marital assets, you are strongly encouraged to seek the guidance of an experienced San Diego family law attorney as early as possible in the proceedings.
In a recent divorce case, the wife filed for Chapter 7 bankruptcy protection in 2007, a year after the parties filed for divorce. As part of the filing, the wife listed the jointly held family residence – known here as the Westminster property. The home was valued at $400,000 with almost $300,000 in the following secured claims: 1) a first trust deed for $195,009, and 2) a second trust deed in the amount of $103,000 held by State Farm Bank. As part of the Chapter 7 filing, the bankruptcy court granted the wife a discharge from her debts. In 2013, the sale of the Westminster home resulted in a net amount of $176,580 (after payment of closing fees and the secured loans).