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Divorce with Joint Debts During Marriage in Texas

Texas divorce and family laws treat joint debts during marriage like other property which is either community property or separate property. Community property consists of the property, other than separate property that is acquired by either spouse during the marriage. When spouses divorce, the property owned by each is presumed to be community property. With community assets and debts, the spouse asserting an asset or debt is separate, can make that argument in a divorce with joint debts.

An argument that joint debts are separate and not to be shared between the spouses can be a bargaining tool in the property division process. After negotiating and settling issues of community versus separate property, the spouses and their attorneys can propose a fair settlement agreement stating who gets which assets and debts.

Note that Texas law states that community property is to be divided based on what the Court deems “just and right,” meaning fair and equitable. In some divorces a 50/50 division is appropriate. Depending on facts, circumstances, and allegations, one spouse might be awarded a greater share of the property.

Related Barrows Firm Article – Dividing up Businesses During Divorce and COVID-19

Options for Dividing Joint Marital Debt in a Texas Divorce

When you get divorced who gets stuck with the debt? Southlake Family Lawyer, Leslie Barrows frequently tells clients that every divorce is unique and requires the right strategy to achieve their goals. At the end of the day, there are two options, negotiate an agreement stating which spouse assumes which debts or let the Court decide. When Texas Judges must divide debts, they tend to give the debt to the spouse who receives the asset tied to that debt. For example, if the husband is awarded the car he is driving, he may be ordered to assume the debt and payments for the car.

Divorce Pro Tip – use a Certified Divorce Financial Analyst (CDFA) for Complex Financial Issues 

At the beginning of a divorce in Texas, the spouses are ordered, or the attorneys make agreements not to sell, disturb, or give away property. But once the divorce is underway the parties can make agreements to sell certain community property assets to pay off debts incurred by both spouses during the marriage.

Another option to dividing joint marital debt is to give one spouse a larger share of community assets in exchange for paying off a larger share of community debt. Depending on the type of asset or debt, it can be difficult to divide things 50/50, and your divorce and property division attorney can work to equalize asset and debt division in a way that makes the most sense. For example, a luxury home that might be difficult to sell might affect negotiations.

Student Loan Debt and Community Property

The issue of student loan debt comes up frequently in divorce. Attorney Leslie Barrows reminds people, do not pay off your spouse’s student loans with your credit card in your name, and think your spouse must reimburse you. The issue with student loan debt is when the student debt was incurred. Generally, spouses with student loan debt from before the marriage will be responsible for their debt. Meanwhile, both spouses can be liable to pay student debt incurred during the marriage.

Despite general rules, every divorce and student loan debt issues are different. Spouses can make the argument that the student loan benefitted the marriage and should be treated uniquely. Another issue can be student loan refinancing and co-mingling of property. If for example, the spouses refinance the marital home and pay off student loan debt, there can be conflict in the divorce process.

Related Issue – Should You Pay Off Student Loans or Invest

Furthermore, credit card debt can be challenging in a divorce. If both spouses are on the credit card, there is an extra word of caution in divorce. The credit card company does not care which spouse was ordered to pay the credit card balance and if left unpaid, both spouses can suffer damage to their credit rating. If this is the case, you might ask the Court to order that joint credit card debt is paid off during the divorce, not afterward when it takes more work to enforce the Court’s orders.

Exceptions to Joint Debt Division in Texas

Before marrying, couples with significant asset and debt questions can resolve concerns with a prenuptial agreement. If the couple so chooses, they can agree in a prenup that any student loan debt incurred before or during the marriage be the separate debt of each spouse. Even if Texas law would favor any of the positions in a prenup, some people appreciate the added security of knowing what will happen in the event the marriage ends in divorce.

If during the marriage the spouses decide they want similar assurances of a prenuptial agreement, they can go to their local family lawyer and get a postnuptial agreement. In some marriages, a postnuptial agreement can save a marriage when the prospect of divorce causes great anxiety.

When facing questions about marriage, divorce, assets, and joint debt liability, get the right information to help make the right decisions. Contact an experienced divorce and property division attorney and learn where you may stand based on your situation.

Leslie Barrows is a Southlake Texas Divorce and Property Division Lawyer and Can Help You Learn Your Legal Rights and Options for Joint Debts During Marriage in Texas at the Barrows Firm (817) 481-1583.

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