Home Debt Taking Out a Personal Loan to Pay Off Debt Has Complicated My Divorce

Taking Out a Personal Loan to Pay Off Debt Has Complicated My Divorce

by admin

Our experts answer readers’ personal loan questions and write unbiased product reviews (here’s how we assess personal loans). In some cases, we receive a commission from our partners; however, our opinions are our own.

This as-told-to essay is based on a conversation with Ethan Hamm, a gay man in California who is splitting from his partner, Kyle Leon Henderson, after a three-year-long domestic partnership. It has been edited for length and clarity.

After our relationship got to a point where we realized we were better off as friends, we researched how to get out of a domestic partnership, and it’s pretty simple. In the state of California, you can either have a petition for the dissolution of marriage, which is a divorce — or you can have what is called a summary dissolution.

There’s a whole checklist of things you have to qualify for as a couple to qualify for a summary dissolution. You have to be under a certain amount of community property, under a certain number of years joined legally as a couple, you can’t own property, and you can’t have any children. There are other factors, but the only factor that kept us from being able to do the joint dissolution was we had too much debt (termed “community obligation”).

The community obligation threshold is $6,000. If you have less than that, you can do the summary dissolution and get out for $65. Pay that and it takes three days to mail the paperwork to Sacramento to get it filed. But when you have to go through a full divorce like we did, California has a six-month cooling-off period. So it’s the difference between ending it this week and, depending on when you start the process, ending it next year.

I took out a personal loan for debt consolidation

During the time we were domestic partners, we took out a debt consolidation loan for $25,000 from Lending Club in June 2022. The loan was only in my name, because we trust each other. But he also bought a car, which was only in his name, and he opened a credit card.

So we kept everything completely separate, but in the state of California, it didn’t matter. If you’re domestically partnered or married, then even if one person in the couple takes on debt during the partnership — even if it’s only in their name — it still counts as community obligation and is therefore the couple’s responsibility.

The loan was for $25,000, and it was taken out as a personal loan that we were using for debt consolidation. We wanted to get our credit card debt under control. After moving from Alabama to New York City to Los Angeles, we had acquired debt from living expenses.

A loan seemed like the easiest solution at the time

There are some other things you can do for debt consolidation, but this seemed like the simplest and easiest way for us. Get a simple personal loan, put it in our joint bank account, split it up in the way we decided was fair for both of us, then use it to pay down our debt.

And that was the thing that locked us into marriage.

When we became domestic partners, we got a door-to-door notary public to come to us, because it was the middle of the pandemic — it all cost less than $200. But because we can’t just do something simple like that to get divorced, it’s costing over a thousand dollars.

And it’s only that low because we’re filing for no-fault divorce, we don’t have any assets but the debt, there’s no child support, he doesn’t owe me anything, and I don’t owe him anything. If this was a more complicated, more contentious process, it could be at least $8,000 to $10,000.

I don’t regret my choices, even if they have been complicated

Looking back, I wouldn’t change anything. There’s no other option that would’ve been good for our situation. The reason we went into a domestic partnership was partly romantic and partly practical. Our 10-year anniversary of being boyfriends was March 20, 2020, so we’d been five days into the world shutting down.

I realized that if one of us went into the hospital with COVID and somebody needed to make some big decisions, our next of kin were our mothers who both live in Alabama. We needed legal documentation saying we could make decisions for each other. We were proud that we could do something practically beneficial in a romantic way on our 10-year anniversary, so we did it.

So even though the process of the divorce is more bizarre and more of a headache than we thought, it’s not earth-shattering. We decided we’re going to have as much fun as possible with it — at the end of our six-month waiting period, we’re going to have a divorce party. We’re going to register and everything since we never got to register as a married couple. If we have to split assets, we want gifts!

You may also like

Leave a Comment