Dividing a Home Equity Line of Credit (HELOC)

Dividing a Home Equity Line of Credit (HELOC)

Who Is Responsible for the Debt?

A Home Equity Line of Credit, or “HELOC” as they are popularly known, is a revolving line of credit that uses your home as collateral. HELOC’s may factor into family law cases. For example, if spouses have an open HELOC acquired during their marriage, but do not take out credit until after separation, then both spouses may risk being responsible for the debt.

The most important factor that will determine whether one spouse may possibly be responsible for the HELOC debt is what the funds were used for. If the HELOC proceeds were used towards community debt or expenses, then it is likely that this debt will be viewed as a community obligation. If the HELOC proceeds were used for expenses after the date of separation that did not benefit the community, then the Court will not make the other spouse responsible.

Some examples of separate property expenses might include a lavish vacation after separation or purchasing gifts for a new boyfriend or girlfriend. In these examples, community funds are used in a way that does not benefit the community and therefore the Court will most likely not obligate the non-purchasing spouse to pay for these debts.

Contact a LA Family Law Attorney

If you or your former spouse has a revolving line of credit, such as a HELOC, it is a good idea to consider closing the account so as to avoid situations mentioned above. Otherwise, you may find yourself having to argue how funds were used which is often tricky and time consuming.

If you are having issues coming to a mutual agreement with your spouse on how community assets and debts will be handled post separation, contact a Family Law Attorney at Castellanos & Associates, APLC at (323) 655-2105. Our consultations are free and we will fight to protect your rights.