How Is Debt Divided in a Divorce in Texas?
Going through a divorce is emotionally and financially taxing. If you have children, you have to negotiate a custody plan as part of your divorce. You’ll also have to split marital assets with your spouse, including money in your bank account, your cars, and your home.
You and your spouse may also owe on car loans, credit cards, or a mortgage. As with assets, you have to divide up marital debts when going through a divorce.
You may wonder, how is debt divided in a divorce in Texas? The divorce attorneys at The Larson Law Office have helped many clients strategize dividing assets and debts when going through a divorce. Contact us today.
Figuring out debt division in a divorce in Texas first requires determining whether the debt is part of the marital estate. Texas is a community property state. This means that most of the property spouses obtain during a marriage is considered equally owned by the spouses and part of the marital estate.
The marital estate includes both marital assets and liabilities. This means that debt incurred during the marriage is also subject to division between the spouses upon divorce. Marital debt can be credit cards, a car loan, or a mortgage. However, some debt may be considered separate and thus will follow only the borrower-spouse after the divorce.
Separate debt is not part of the marital estate. Instead, the separate debt belongs solely to the borrower-spouse. One type of separate debt is debt that one spouse incurs before the marriage.
A prenuptial agreement is commonly used to specify separate and community property. It may also specify that debts acquired during the marriage are separate property.
However, be advised that just because a debt is in the name of only one spouse does not make it separate. If it was acquired during the marriage, it is likely community debt.
What if My Spouse Incurred Most of the Marital Debt?
Generally, debt is split equally between spouses in Texas. However, there are some exceptions. The law requires that a court divide marital property and liabilities in a “just and right” manner. Texas courts have held that a “just and right” division is not always a 50-50 split of property and debt. A court will look at several factors to decide if your marital property and debt should be divided differently. A family attorney can help you understand if you have a case for a “just” debt division, especially if your spouse was primarily responsible for running up the debt.
Debt Division Options
So how is debt divided in a divorce in Texas? As you can see, there is no easy answer to that question. A family law attorney will help you negotiate the right solution for you. Some options for dividing debt in a divorce include:
- Dividing the debt and property up equally down the middle;
- Agreeing to sell off joint property and pay off outstanding marital debts;
- Each spouse agrees to assume the debt attached to the community property they’d like (e.g., the car loan goes with the car); or
- One spouse takes a more significant portion of the debt because the other spouse has primary physical custody of the children.
Generally, a court will approve an agreement reached between the spouses. However, if you cannot agree, a court-ordered debt division in a divorce in Texas is standard. The court will hold a divorce hearing and decide how to divide the community property and debt between the spouses.
Marital Debt and Creditors
Keep in mind that even if the divorce decree divides debt liability between the spouses—a creditor may not see it that way. Here’s an example. Let’s say the court orders you to pay off one credit card and your spouse to pay off another. However, both credit cards are in both of your names. If your spouse does not pay off the credit card they are supposed to, the creditor will still come after you for that debt. Plus, if your ex-spouse fails to make these credit card payments, it can affect your credit score.
The same can be true with a mortgage. If your spouse agrees to pay off the mortgage, the mortgagor can still seek payment from you if your spouse fails to pay. A lawyer can help you take legal action to ensure that the debts your ex-spouse assumes won’t follow you after your divorce.
Contact The Larson Law Office for Help Dividing Your Marital Debts
Understanding debt division during divorce is complicated. Fortunately, The Larson Law Office can help you strategize debt division during your divorce. Our team provides frank, compassionate advice to clients facing divorce and other family-related issues. Contact us today for a free consultation.