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Handling debt in a Texas Divorce

When either you or your spouse incur a debt during the course of your marriage it is presumed to be included within the community estate. On the other hand, if you have incurred a debt before you were married that debt is considered to be separate property.

Which spouse ends up being responsible for paying the debt upon the conclusion of the divorce does not have much to do with which spouse is actually going to be held liable for paying the debt by creditor.

Contrary to popular belief, being married does not create a situation where both you and your spouse are jointly liable for the other’s debts. Joint liability is possible, however, in a situation where the debt was taken out to pay for the necessities of the family home.

How to determine which spouse’s property are liable in relation to a particular debt

A large part of your divorce will be determining how your marital estate is going to be divided. This process begins by figuring out what property is going to be considered “community” and what property is going to be considered the “separate” property of you or your spouse.

Whatever is determined to be part of your or your spouse’s separate property is not going to be considered when divvying up the debts to the marriage. Typically income going forward that would normally have been your separate property had you never married will be considered separate property as well. That income can be applied to whatever debt is determined to be the separate debt of you or your spouse.

Intent is important when considering a debt

The intent of you and your spouse when the debt was borrowed is important for a trial court to look at as well. A somewhat easy to decipher situation is when money is borrowed for the purpose of improving your or your spouse’s separate property.

An example of this could be a home equity loan that is taken out to put an addition on a home that you owned prior to your marriage. These borrowed funds clearly were intended and actually did improve the standing of your own separate property and therefore the debt will be treated as your separate responsibility.

What about credit cards?

Oh, yes, the all important (and relevant) subject of how credit card debt is handled in a divorce. For starters, if you open up an account with a credit card company you must have first signed a contract to do so that establishes the rights, duties and obligations of yourself as the borrower and the credit card company as the lender. Figuring out which spouse signed the agreement is pretty straightforward to do since all it takes is requesting a copy from the credit card company.

The next step would be to see if both you and your spouse are account holders for the card (whether you both signed your names to the credit card agreement) or if one of you is merely an “authorized user”. An authorized user is someone who has the ability to make purchases using the credit card but is not ultimately liable for paying the debt associated with that purchase.

Strategically in the divorce it would be wise for the authorized user to not seek to be the party liable for that debt, even if it means an advantage in other areas of negotiation.

The reason being is that as someone who is not an account holder, your ability to restrict your soon to be ex spouse from spending on that card are minimized. On the other hand, if you are the account holding spouse then it would behoove you to get your spouse’s name removed as an authorized user as quickly as possible to avoid any unexpected charges showing up on the bill.

Debt should be divided according to liability

The bottom line when it comes to debt and divorce is that it must be determined whether you or your spouse (or your assets) can be held liable for a particular debt. One you have an answer to this question, you can then determine how the debt can be divided accordingly. A situation you will want to avoid is having a debt allocated in a divorce decree to a spouse who is not legally liable for the debt.

The result is that often times the motivation to pay the debt is not there and you would have little recourse to go back to court to seek relief in the form of an additional court order telling your ex spouse to pay the debt. All the while your credit score dips and dips because your ex spouse refuses to pay on the department store credit card or the line of credit you have at the big box home improvement store.

Remember: creditors don’t care about your divorce decree

Ultimately, the people who are responsible for collecting payments on debts (the company themselves or a collections firm) do not care what your family law court order has to say as far as whose responsibility the debt is. The company or its debt collector has a contract that either you, your spouse or both of you signed that is going to dictate their actions moving forward.

Questions on debt in a divorce? Contact the Law Office of Bryan Fagan, PLLC

Debt is no fun to think about but as Americans are utilizing it more and more the subject has become increasingly relevant to family law attorneys. The attorneys with the Law Office of Bryan Fagan, PLLC represents clients across southeast Texas and have negotiated on their behalf to allocate both the property and debts of their marriages in reasonable, rational and sensible ways.

If after reading this blog post you have questions about community vs. separate property or any other question in Texas family law please do not hesitate to contact our office. A licensed family law attorney is available to meet with you six days a week to answer questions and to speak to you about the services our office provides clients with.


Adobe Stock 62844981[2]If you want to know more about what you can do, CLICK the button below to get your FREE E-book: 16 Steps to Help You Plan & Prepare for Your Texas Divorce

Other Articles you may be interested in:

  1. What Happens to Marital Debt During a Texas Divorce?
  2. How credit cards and debts are handled in a Texas Divorce
  3. Know How Property and Debts are Divided, When Preparing for Your Texas Divorce
  4. What Happens to Marital Debt During a Texas Divorce?
  5. Dividing Property in a Texas Divorce - The Just and Right Division
  6. Why is Separate Property Important and How to Keep it Separate in a Texas Divorce?
  7. What Wikipedia Can’t Tell you About Texas Divorce and Marital Property Division
  8. Texas Divorce Property Division Enforcement
  9. Separate Property in a Texas Divorce?
  10. Does it Matter Whose Name is on Title or Deed of Property in a Divorce in Texas?

Law Office of Bryan Fagan, PLLC | Kingwood Divorce Lawyer

The Law Office of Bryan Fagan, PLLC routinely handles matters that affect children and families. If you have questions regarding divorce, it's important to speak with ar Kingwood, TX Divorce Lawyer right away to protect your rights.

A divorce lawyer in Kingwood TX is skilled at listening to your goals during this trying process and developing a strategy to meet those goals. Contact Law Office of Bryan Fagan, PLLC by calling (281) 810-9760 or submit your contact information in our online form. The Law Office of Bryan Fagan, PLLC handles Divorce cases in Spring, Texas, Cypress, Spring, Klein, Humble, Kingwood, Tomball, The Woodlands, Houston, the FM 1960 area, or surrounding areas, including Harris County, Montgomery County, Liberty County, Chambers County, Galveston County, Brazoria County, Fort Bend County and Waller County.

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