A major concern for many of our potential clients during their
dividing up the debt. Unfortunately for many married couples this is because they are under
water and have more debt than they do
assets. Often much of this marital debt is in the form of credit cards.
When meeting with these potential clients their solution is that they and
their ex should slip all the credit card debt 50/50. In this blog article,
we will discuss how credit card debt is handled in a
Is it as simple as splitting credit card debt 50/50 in a Texas Divorce?
I believe many potential clients thinking is that because there is community
property, there must be community debts as well. Marriage does not, by
itself, create joint liability for the debts.
Characterization of property as separate or community plays a lot into
the question of dividing up property during a
divorce. However, characterization of debt does not always determine the question
The designation of a debt as community property has no effect on which
spouse may be liable for the repayment of the debt.
Joint liability for debt may exist if one spouse incurs a debt:
- as the agent for the other spouse, or
- if the debt is for basic living necessities
First Step to Determining Liability of Debt
One of the first steps to determine which spouse’s properties may
be liable is to classify the marital property.
Each spouse may have:
- separate and community property
- sole management and Joint management of property
Under Section 3.202 of the Family Code:
- A spouse’s separate property is not subject to liabilities on the
other spouse unless both spouses are liable by other rules of law.
- Unless both spouses are personally liable as provided by this subchapter,
the community property subject to a spouse’s sole management, control,
and disposition is not subject to: (1) any liabilities that the other
spouse incurred before marriage; or (2) any nontortious liabilities that
the other spouse incurs during marriage.
Separate property is not generally subject to the other spouse’s
Sole Management of Property
If a spouse has sole management and control over their community property
they would have owned except for being married, such as personal earnings.
This sole management community property may only be used to satisfy the
debts of the spouse that manages the property or the joint debts.
Jointly Managed Property
Jointly managed property, such as jointly titled asset, may be used to
satisfy either spouses’ community or separate liabilities.
Debt Before Marriage
Debt During Marriage
Separate Property of One Spouse
A debt incurred before the marriage is presumed to be separate property debt.
A debt incurred by a spouse during the marriage is presumed to be a community
If a debt is incurred during the marriage, but the creditor agreed to look
solely to the separate property of the spouse for satisfaction of the
debt, then the debt may be a separate property debt.
Second Step – Intent of the Parties
Borrowed funds requires an examination into the intent of the spouses in
incurring the debt. If the money is borrowed to benefit a spouse’s
separate property, and the intent is to repay the funds using separate
property, then the borrowed funds will likely be treated as a separate
Credits cards usually involve an agreement and treated as a contractual
obligation. This means it is normally easy to see who is contractually
liable for the debt.
Debt Usually follows the Asset or who is Contractually Liable
The general rule in Texas is that debt that is secured by an asset goes
to the person who
gets the asset after the
divorce. If you meet with me, you might hear me say “the person who gets
the toy gets the debt.”
debt is allocated in a divorce to a spouse who is not legally liable, then the spouse has little motivation
to pay and there are few legal remedies available in the court system
to force payment.
In addition, the credit of the spouse incurring the debt can be damaged
by relying on a spouse to make payment. This is one reason a Judge will
often award the credit card debt to the person who is contractually liable
for the debt.
If possible the judge may try and offset this debt by allocating more of
the stuff if there is some disparity between the spouse in regards to
award of debts. However, this is not always possible.
How to handle credit card debt during a
Texas divorce can be a stressful process. In order to complications, and allow for a
just and right division of marital debt, it is important to work with
Texas divorce attorney who is experienced with how to hande debt in a divorce.
If you want to know more about what you can do,
CLICK the button below to get your
“16 Steps to Help You Plan & Prepare for Your Texas Divorce”
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Law Office of Bryan Fagan | Houston, Texas Divorce Lawyers
The Law Office of Bryan Fagan routinely handles matters that affect children
and families. If you have questions regarding
divorce, it's important to speak with one of our
Houston, TX Divorce Lawyers right away to protect your rights.
divorce lawyers in Houston TX are skilled at listening to your goals during this trying process and
developing a strategy to meet those goals.
Contact Law Office of Bryan Fagan by calling (281) 810-9760 or submit your contact information in our online
form. The Law Office of Bryan Fagan handles
Divorce cases in Houston, Texas, Cypress, Klein,
The Woodlands, the FM 1960 area, or surrounding areas, including
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