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Reimbursements: Repayment of Separate Property Debts

Reimbursements – Part 3 of 3 – Repayment of Separate Property Debts

I am going to discuss, here, two statutory schemes for reimbursement of a party’s own money applied to another party’s obligations, usually paid during the course of the relationship.

If you were married…

The easiest of these two statutes to apply is Family Code Section 920, which allows for a spouse to recover half on the funds paid during marriage for the separate debts or obligations of the other spouse. This is a marital reimbursement right and requires marriage to have occurred for Family Code section 920 to be applicable.

Most spouses don’t keep track of these things during marriage, for obvious reasons. Debts owing by one party – let’s say Wife’s credit card debt – which were incurred prior to marriage are her separate property obligations. To the extent these debts are paid down during marriage, Husband would have a right to recover half of those payments. His deadlines for seeking these reimbursements would be three years after the separate property debt was paid with community funds if he does not wish to seek divorce or separation; or if either party files for divorce or separation, within three years of filing the Petition.

Obviously, the problem here is that no one keeps records of their new spouse’s debts when they’re getting married. These records are vital to proving up the debt existed prior to marriage. Banks don’t keep records going back much over seven years, in most cases, and most marriages tend to last a bit over seven years. Sometimes we can reconstruct the records, as credit card companies will keep records farther back (though they are owned by banks) but, as always, it’s much less expensive for a client to pursue this claim if he has held onto these records, and we don’t have to go fishing for them with various subpoenas.

If the spouse doesn’t have these records already, we need to see a substantial debt to make the time an attorney will spend pursuing those records worthwhile. I will often tell clients “The juice has gotta be worth the squeeze,” to quote Tony Soprano. It doesn’t make sense to spend $3,000 pursuing a $1,000 reimbursement claim, for example. If the reimbursement claim will exceed the cost of pursuing it, we still want the client to be aware of the cost in terms of emotional discomfort and peace of mind for pursuing that debt.

Other debts recoverable would be payments the community made to meet one party’s child support obligation for a child of another relationship. If Husband, for instance, had a child before marriage and the community, during marriage, paid his $1,000/month support obligation for five years… That’s a significant number [FN1] even though Wife would only be entitled to recover half of the community’s outlaw for that separate child support obligation.

Other separate property obligations paid during marriage are reimbursable; the principle applies to the character of the debt [must be separate]and the character of the funds used to pay down the debt [must be community]. If you are wondering, call an attorney. The evidentiary issues here are difficult for a layperson to overcome without competent counsel.

If you weren’t married…

This is far more limited, but still worth mentioning. Under certain limited circumstances, a third party can recover payments for the support of a child not his/her own, if the child’s parent is not meeting that child’s reasonable needs. For further information on this reimbursement right, please see Family Code section 3950 – but beware! Pursuant to a recent case, Look v. Penovatz, (2019) 34 Cal. App. 5th 61, if an existing child support order is in place, a third party’s outlays exceeding that order may not be recoverable. Other reimbursements and exceptions apply, but this is an outlier area, so I am not going to spend more time on it here.