One thing about debt is that it never disappears — even in a divorce. But how does that work exactly? Sure, you’ve heard that Texas is a community property state and that all property and assets acquired during the marriage (with a few exceptions) will be divided in a fair and just way. Is the same true for debts, though?
Yes. Community property laws aren’t limited to houses, cars, bank accounts, investments, etc. They also include various types of debt — credit cards, installment loans, business debt, and even medical debt.
How Does Debt Division Work?
If you’ve been married for any length of time, you and your spouse have likely acquired quite a bit of debt. Perhaps you took out a loan to pay for a new HVAC system or finally complete that home renovation you’ve talked about for years. Maybe you or your spouse racked up credit card debt starting a family business.
Whatever the scenario, this is a common question among families we counsel at Christman | Daniell Attorneys, mainly because what was once “both of yours” could suddenly be “just his debt” or “just hers” after a divorce.
Without getting too technical, the important thing to know here is that property, assets, and debts are treated the same in a Texas divorce. The Court will inventory everything you’ve acquired during your marriage (including debt) and classify them as separate or community property. From there, everything will be divided appropriately.
What does this mean?
It could mean that your HVAC installment loan balance may be divided equally.
It could also mean that you or your spouse are responsible for all of it.
If one of you carried debt into the marriage (credit card, car loan, etc.), that could remain your individual responsibility.
Property division in a Texas divorce isn’t always a 50-50 split. There are various factors that the court considers when dividing community debts, a few of which include the following:
- The type and cause of the divorce debt in question
- The current financial standing of each spouse
- The age of each spouse
- Each spouse’s earning capacity and opportunities
- Size of the new separate estates
What If We Don’t Want the Court To Decide?
Great question! If spouses don’t want to leave the division of debts up to the court’s interpretation of “just and right,” they can negotiate a Marital Settlement Agreement (MSA). An MSA is a legally binding document that amicably divides both assets and debts. The court usually approves an MSA if it meets legal requirements and seems fair to both parties. Again, it is advisable to consult an attorney when drafting your MSA.
Please Call Christman | Daniell for Your Legal Needs Today!
Looking for family law services in Texas? Christman | Daniell is your premier choice. With years of experience and a deep understanding of the legal landscape, our skilled team is dedicated to helping families navigate complex legal matters. Whether it’s divorce, child custody, or adoption, trust Christman | Daniell to provide compassionate and effective representation for all your family law needs throughout Collin County.
Please consult an attorney for advice about your individual situation. The material on this website and in this or any blog article we publish are for informational purposes only. They do not constitute legal advice. The attorneys at Christman | Daniell believe in tailoring legal advice and solutions to your own personal circumstances.
We have an unwavering commitment to helping our clients at each stage of their legal situation.