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Community Property & Debt

New Mexico is a community property state.  As a community property state, all marital property and debt is divided equally between the parties upon dissolution of the marriage.  The law is pretty straightforward in concept.  The application of the law can be significantly more complex and contentious.

The division of property and debt is often the most hotly contested part of the divorce, other than child custody and time-sharing.  Each party is entitled to an equal share of all property and debt identified as community property.  Likewise, each party is equally responsible under the law for all community debt.  The greatest challenge is often in the identification and designation of community property and debt.

As a rule, any property or debt acquired during the marriage is community property.  In the absence of agreements to the contrary such as prenuptial agreements or sole and separate property agreements, property and debt acquired during the marriage is considered part of the community no matter which party acquired it.  The same outcome results regardless of whose name is on the title to the property or who incurred the debt.

There are a number of qualifications to the rule.  First and foremost, there must be a legal marriage.  New Mexico does not recognize common law marriage as do many states.  Therefore, in the absence of a legal marriage, there can be no community property.  Second, there are a number of exceptions to the blanket rule that all property acquired during the marriage is community property.  Exceptions to the rule included inheritance, gifts, personal injury settlement, gambling debts, and property and debts incurred in violation of court order.

As might be imagined, these disputes can become very heated.  The outcomes can seem very unfair particularly in cases of community debt where one of the parties is reckless, dishonest or malicious in running up debt and the other party remains liable to creditors.  There are ways to bring greater fairness to the division of community property and debt.  The first step is always figuring out what’s there to divide and where, when and how it arose.  This can be a challenge but only then can the community property and debt be equitably divided.

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