During a divorce, Texas law mandates that property be divided by what is “right and just”. That includes things like your home, cars, and investments. However, it also includes your debt. Under family law in Texas, debt is considered property and it can be either community or separate property.
Examples of Debt in a Marriage
Chances are good you can think of quite a few debts you and your spouse jointly own, but we’ll provide some concrete examples:
- Mortgage payment
- Car loan payment
- Credit card debt
Other examples can include tax debt incurred during the marriage, and even student loan debt, if the loan was taken out during the marriage. Generally, student loan debt that originated before the marriage is considered separate property.
Separate and Community Debt: What’s What?
In most cases, but not all, community debt is any debt that you and/or your spouse has incurred during the marriage. For instance, if you purchased a home during your marriage and still owe on the mortgage, that’s a form of community debt. If you purchased a car during the marriage and still owe on the loan, that’s another type of community debt.
What’s separate debt, then? Any debt that you or your spouse had before the marriage remains solely yours after the divorce. For instance, suppose your spouse had tax debt going into the marriage that remained unresolved. That tax debt would remain your spouse’s after the divorce.
The Issues with Community Debt
During the property division stage of your divorce, the judge will divide assets as is “just and right”. Note that this does not always mean a 50/50 split. It also only applies to ownership of the asset. Your creditors aren’t going to immediately absolve you of any shared debt in an asset that now belongs to your spouse.
Let’s take your mortgage payment as an example. Suppose your spouse ends up with a house that was purchased during the marriage. While the judge might award the home to your spouse, that doesn’t change the fact that both you and your spouse are liable for repaying the debt in the eyes of the bank.
How Do You Divide Debt?
Dividing and addressing debt is one of the most critical steps in any divorce. There are quite a few ways to do this, including selling assets to pay off creditors, negotiating larger shares of assets in return for shouldering a larger share of the debt load, and property division settlements that split the debt equally between the spouses.
Dealing with debt during a Texas divorce can be complicated. Take your time and work through everything with the help of your attorney.