One of the biggest concerns for divorcing couples is how to split up assets and debts. There is often understandable friction about dividing assets. After all, people marry believing they’ll be living happily ever after. When they get divorced, they must be concerned about the resources they’ll need to live and thrive on their own. The dynamic quickly shifts from sharing a house and finances to looking out for number one.
But dividing debts is trickier. You might have ideas about how to divide the marital debt, but to obtain the best result in your situation, you’ll need to talk with an experienced divorce attorney.
How Community Property Works
Texas is a community property state, meaning that assets acquired during the marriage are shared by the couple regardless of which spouse earned the money or purchased the asset. Assets acquired prior to the marriage, such as an inheritance, are considered the separate property of that person. However, if part of that inheritance was used to purchase the marital home, that portion of the inheritance would become community property. Even if the down payment for the house came entirely from that inheritance, proceeds from the sale of the house belong to both parties.
When it comes to the distribution of those community property assets in divorce, Texas law requires that the assets be divided in a “just and right” way. This doesn’t mean that all the assets will be divided 50/50. It means that the division will be equitable. For example, the court may not force the sale of the home. Instead, they might give one spouse the home and give the other an equal value portion of the couple’s investments.
Debts and Divorce
Texas law is clear on the idea that debt you brought into the marriage on your own stays with you. If you brought student loan debt with you into the marriage, it would still be yours after you get divorced.
Where it gets complicated is with debt that both of you took on together during the marriage. You can certainly state in your decree that some debts will be shared by both parties, while others will be the sole responsibility of a single party. But, if both your names are on a credit card, and there’s a missed payment on it, the credit card company will look for both of you to pay it.
A Bankrate article correctly stated that after a divorce, you might find you’re required to pay debt you didn’t think was yours, or you might find you don’t have to pay debts you thought you’d be stuck with. One of the determining factors will be who signed on the application or loan paperwork. If your name is on the paperwork, you will be obligated to pay the debt, even if the court assigns the debt to the other party.
How to Resolve Jointly Held Debt Issues
In the case of a mortgage for the family home, it might be possible to refinance the home in the name of the party to whom it was awarded in the divorce. Once this is accomplished, the other spouse will no longer be accountable for the debt, even if the spouse who refinanced fails to maintain payments.
With other types of debt, such as credit cards, car loans, personal loans, or home improvement loans, you might still be able to get your name off the loan or credit card account. A divorce decree saying that the debt will be the sole responsibility of your ex can help you to make that happen. You could tackle the process yourself, but if you do, you should be prepared for a difficult and lengthy process. An experienced divorce lawyer could help you with that.
If you and your spouse are on friendly terms, perhaps you could convince them to prioritize the repayment of the loans or credit cards that are still in both your names. The sooner those debts are paid, the sooner you’ll both be free of the debts that keep you connected.
Contact Us
If you’re divorcing and are concerned about the debts you and your spouse have acquired, contact BB Law Group PLLC at (832) 534-2589 to see what your options are. An experienced Woodlands family law attorney can gauge your financial situation and help you chart a path forward. Even though it might not be as easy or as simple as you’d like, our lawyers can help you make sense of it and make the best of it. Call today and let us get to work for you today.