Technically insolvent community??

[ramonaspaskos]

What is the name of your state (only U.S. law)? CA

What happens in this case?? Say if total debts (including mortgage) exceeds total assets (cash; retirement etc.) what happens? Since you have to split both assets and debts, how do you split this??

 

[LdiJ]

What is the name of your state (only U.S. law)? CA

What happens in this case?? Say if total debts (including mortgage) exceeds total assets (cash; retirement etc.) what happens? Since you have to split both assets and debts, how do you split this??

Well...you have to back the mortgage and any car payments out of that to a great extent.

Anyone who keeps an asset, keeps the debt associated with that asset even if the asset is upside down. It is typical that cars are upside down, but less typical (except these days) that mortgages are upside down.

If the entire community is truly upside down, its likely the best way to handle things is to completely liquidate the entire community, with each of you responsible for paying off 1/2 of whatever debt remains.

Of course, the case value of the insurance that is apparently at question in your case is part of the marital assets.