Most married couples in Texas have shared financial commitments. Many spouses initially only consider the division of assets when getting a divorce. However, you must also consider how to divide your debts and liabilities in a divorce.
The Pearland divorce attorneys at Terry & Roberts can offer guidance and help you understand how to navigate the dissolution of marriage better and prepare for the future.
What Debts and Liabilities Are Subject to Division During Divorce in Texas?
Every married couple will have debts unique to their relationship. Common debts and liabilities in a marriage generally include:
- Mortgages
- Auto loans
- Credit card debt
- Personal loans
Determining when a debt occurs is the key to dividing debts and liabilities in a Texas divorce. First, we look at their classification in marriage to understand their division and how to navigate their fair distribution.
Texas Is a Community Property State
Texas considers most assets acquired during marriage to be community property, jointly owned by both spouses. Gifts to a spouse, inheritances, or personal injury settlements, excluding damages for lost earning capacity, are likely viewed as separate property. If a couple divorces, equitable division of community property occurs.
The same principle of community property applies to debts and liabilities. Debts a couple incurs during a marriage are split equitably between partners.
Partners often bring assets into a marriage. These assets are separate from marital property or belong to one spouse. Dividing these assets in a divorce is generally not legally necessary, but exceptions do exist. Debts and liabilities that spouses bring into the marriage are generally considered separate property as well, belonging to the spouse that incurs them.
The Equitable Division of Debts and Liabilities
Equitable division does not mean to split equally. To simplify the process, a judge may assign one debt to you and another debt of equal liability to your partner. A divorce decree can establish each spouse’s accountability for paying for the debts assigned to them.
It is vital to remember that debt collectors may try to collect a debt from you that is assigned to your spouse to pay. Court orders only apply to spouses but do not prevent a collector from reaching out to the spouse whose name is on the loan. While divorce may not impact your credit score, debts and liabilities owed by a couple, where one party fails to pay a debt, can affect your purchasing and borrowing power.
A Pearland divorce attorney with our firm can navigate the legal process of filing a motion with the court to enforce a divorce decree. A court may hold either spouse in contempt for failing to pay the debts and liabilities for which they are responsible.
What Just and Right Means in Dividing Marital Debt in Texas
The award of marital property, which is the division of assets and debts during a Texas divorce, occurs in a manner that the court deems just and right. A marriage may end because a spouse incurs drastic amounts of debt without the other spouse knowing. Proving that specific debts and liabilities acquired during the marriage belong to one spouse is necessary to prevent you from sharing the responsibility for paying these debts.
If you are facing this concern, collect the following documentation to help prove debts belong to your spouse and not you:
- Credit card statements
- Bank statements
- Loan documentation
- Credit reports
- Tax returns
A court may assign a spouse more responsibility for community debt when they commit acts of infidelity or mismanage marital funds, contributing to the divorce and your debt. Documentation can identify crucial evidence of transactions that occurred without your knowledge.
Ways a Court May Enforce Payment for Debts
Your name may remain attached to a debt that your former spouse is responsible for paying after the divorce. In some cases, an ex-spouse genuinely forgets to pay a debt from the divorce. Nonetheless, these missed payments can still impact you once the marriage ends. We don’t recommend waiting if your ex has any leftover debts that could affect your future.
A member of our firm can work on your behalf with the courts to enforce debt payment through the following methods:
- Contempt of court, resulting in a spouse incurring fines, jail time, and possible probation
- Wage garnishment
- Property liens
- Seizure of bank accounts or assets
We work with clients throughout the divorce process, providing insight into debt and liability challenges a client may face in the future, which allows us to address problems before they occur. Additionally, we can discuss the pros and cons of filing a civil action against a former spouse who fails to meet their financial obligations when the loss of a job or change in health prevents an ex-partner from working.
The Responsibility for Debts and Liabilities After Separation
Texas does not recognize legal separation. Couples continue to be married until they have legally finalized the divorce. However, judges often view any debts a party accrues after separation as belonging to that party alone. Taking protective measures after separating from a spouse in Texas can help you avoid incurring further marital debt.
Protecting from Debts and Liabilities During a Texas Divorce
Assuming a spouse will treat you reasonably can be costly if they change their mind, lose their job, or remarry. Take these actions to protect your credit and prevent taking on further debt a partner incurs after separating:
- Prioritize closing joint bank accounts or transitioning them to individual accounts.
- Monitor joint debts to ensure on-time payment until paying off the debts or refinancing can occur.
- Regularly review and enroll in credit report alerts to review transactions that can impact you financially.
- Notify companies you owe money of the pending divorce and your expected shifts in debt responsibility.
We understand that communication can be tricky during a divorce. Heated exchanges about debt can cause additional frustrations and confusion. We strive to minimize or prevent emotional encounters, serving as a mediator for you to provide a more stress-free environment.
The Impact of Prenuptial Agreements on Debts and Liabilities in a Texas Divorce
We highly recommend discussing debt before marriage so you each understand the other person’s expectations for accruing and paying debts. A prenuptial agreement can address how managing debts and liabilities in a marriage will occur in the event of a divorce.
An agreement can provide additional protection for you or your partner if one of you plans to open a business or purchase significant investments, like property, during the marriage.
Ensuring the fair and enforceable execution of a prenuptial agreement in Texas is crucial for it to hold up in court.
Discuss Debts and Liabilities in a Marriage With a Pearland Divorce Attorney
The assets you retain, as well as any debts and liabilities you are responsible for, may significantly impact your future after a divorce. Debt can prevent you from getting essential loans, securing a home or transportation, and complicate your ability to move forward confidently. Our Pearland divorce attorneys in Brazoria County have experience navigating divorces to benefit our clients.
The team at Terry & Roberts has answers to your divorce questions and can provide the support you deserve to strive for future stability. Let us help you protect against the impact of certain debts and liabilities in the divorce process.