Even if you don't know much about getting a divorce in Texas, you have likely heard Texas is a community property state. You may not know exactly what this means or how it could impact your life, but you've at least heard the term.
If a piece of property was purchased during your marriage, it is likely to be termed community property. This goes for acreage in the country, your marital home, and right down to the silverware that you and your spouse eat with every night.
The other side of the equation would beg you to determine whether or not the same rules apply to marital debts? Debts are not nearly as fun a counterpoint to the fun stuff in life like the houses and land and whatnot that we just discussed in the opening paragraph of this blog.
While not nearly as fun, debt for most Texans is real and can even outnumber property and assets for many families going through a divorce. With this realization in place, I think you would agree that you need to learn how debt is handled in a Texas divorce? Is it as easy as just splitting it down the middle with your soon-to-be ex-spouse?
The general rule when it comes to how debt is handled in a Texas divorce
Most likely, any debt or liability associated with a piece of property or with a person will go to that person in a divorce. Of course, some circumstances and scenarios can play out where this general rule may not apply. Still, for the most part, if a debt is in your name or if a debt is attached to a piece of property in your possession or management, then it's your responsibility.
For instance, you likely sat down at a car dealership, bank, or credit union when you financed your car. You signed a financing agreement where you became obligated to pay the debt owed to a lender/creditor.
This is an example of a reasonably straightforward situation where you are currently on the hook for debt and would likely be so after your divorce as well. Apply this example to a television that you financed through a store at the mall or even a cellphone. If your name appears on the dotted line of a finance agreement, then you ought to be prepared to pay that debt on your own after a divorce.
Becoming liable for the actions of your spouse when it comes to debt
The previous section of this blog that covered instances where you are directly responsible for debt hopefully made sense quickly. You sign the paper, you become liable. This is a pretty straightforward lesson to learn. What about situations involving debt that aren't so easily digestible? For example- can you be held responsible by a family court judge for debts that are your spouse's and not your own?
Yes, you can become responsible for debts that are not your own, but we'll need to discuss this subject a little more in-depth before we move on to discuss another matter. Under the Texas Family Code, you can become personally liable for your spouse's debts if your spouse has acted as your agent in incurring the debtor if the debt is for a necessary item.
How can your spouse act as your agent, you may be asking? Typically this means that if you provided your spouse with your authority or permission to do something on your behalf in a particular area, then it could be reasoned that they have acted as your agent. You must have specifically laid out what authority was being given to them. Your spouse would not argue that because you two are married, they have the power to enter into contracts that create a debtor-creditor relationship.
A discussion on what is "necessary."
What a necessary item is for you and your spouse may not count as an essential item for my spouse and me. However:
- clothing and
- medical care
Almost assuredly are necessary items across the board for any family in Texas.
Who is on the hook for a debt associated with a "necessary" upon your and your spouse's divorce depends on who is exercising control over said property. Let's recall from previous blogs of ours that both you and your spouse are solely responsible for and manage:
- both of your separate property, respectively, as well as
- Those items of community property would have been considered separate property had you and your spouse got married. This would include your wages/salary, personal injury settlements, and things of that nature.
If you have ever heard a lawyer refer to an item as a "special," then the sort of property that we referred to in the prior paragraph would fit the bill. Wages and salary, personal injury settlements, and the income derived from your separate property are what I have in mind.
This community property is "special" and would be counted among those sorts of property that ordinarily would be separate had your marriage not occurred. All other community property is subject to joint control of you and your spouse in all circumstances- absent a pre or post-marital agreement.
We will continue our discussion on debt tomorrow.
I have more to discuss with you all on debt and divorce, so please join me tomorrow when we pick up this subject.
In the meantime, if you have any questions about debt in the context of a Texas divorce, please do not hesitate to contact our office today. A free-of-charge consultation with one of our licensed family law attorneys is only a phone call away. We will work to answer any question you have and discuss the services that our office can provide you and your family with as clients of ours.
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Other Articles you may be interested in regarding.
- Handling the issue of credit card debt during your divorce
- How are Credit Cards Handled in a Texas Divorce?
- How credit cards and debts are handled in a Texas Divorce
- Debts, Credit Cards and Divorce in Texas
- What Happens to Marital Debt During a Texas Divorce?
- Know-How Property and Debts are Divided When Preparing for Your Texas Divorce
- What Happens to Marital Debt During a Texas Divorce?
- Dividing Property in a Texas Divorce - The Just and Right Division
- Why is Separate Property Important and How to Keep it Separate in a Texas Divorce?
- What Wikipedia Can't Tell you About Texas Divorce and Marital Property Division
- Texas Divorce Property Division Enforcement
- Separate Property in a Texas Divorce?
- Does it Matter Whose Name is on Title or Deed of Property in a Divorce in Texas?
Law Office of Bryan Fagan, PLLC | Houston, Texas Divorce Lawyers
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