When a marriage ends, spouses often focus on how they will divide their assets. However, dividing debts can and should also be a concern. In Texas, courts assess both the assets and liabilities accumulated during the marriage to determine an equitable allocation of debt between spouses. But what exactly does this mean for you?
Texas follows community property principles
Texas adheres to community property laws, which classify most property and debt acquired
during the marriage as jointly owned. This presumption of equal ownership generally applies to
credit card balances, personal loans and other financial obligations. This can be true even if only one party incurred the debt. Unless proven otherwise, courts will treat these liabilities as shared.
Defining separate debt in legal terms
Debts incurred before marriage or after legal separation typically qualify as separate obligations.
For example, a student loan obtained by one spouse prior to the marriage remains that individual’s sole responsibility. Courts also scrutinize how the borrowed funds were used. If the benefit derived solely served one spouse, the court may allocate the debt exclusively to that person.
Judicial considerations in equitable distribution
In Texas, courts usually start by assuming that property should be divided equally in a divorce. However, they aim to divide things fairly based on the details of each case. If one person earns much more than the other, if someone has been dishonest with money or if one person has more control over shared property, the court might decide to divide things unequally.
Further, debts often stay with the asset they are tied to. For example, if one spouse gets a car, they might also take on the car loan.
If you are worried about debt in your divorce, it’s important to keep track of all shared debts and financial responsibilities. You can do this by getting credit reports, bank statements and loan agreements. Closing or freezing joint accounts can help stop more debt from building up. If both parties can agree on how to split debts before going to court, it can make the legal process easier and reduce conflict.