How Is Debt Divided in a Divorce?

How is debt divided in a divorce? The divorce process is emotionally draining even in a seemingly simple situation. If you have children, custody negotiations become a major issue. 

When you have assets, you also have to split them with your spouse. This includes a range of assets, too, from cars and houses to the money in your bank account. 

Additionally, this can include debt from a mortgage, loans, credit cards, and more. Similar to assets, you have to figure out how to divide debt in a divorce. 

So, exactly how is debt divided in a divorce in Texas? At Universal Law Group, our divorce attorneys help clients develop a strategy around dividing debt and assets. 

Below, we explore the division of debt in Texas divorces. However, every situation is unique. To learn more about your situation, it’s best to schedule a consultation and work directly with an attorney. 

Separate Debt

In Texas, separate debt is not a part of the marital estate. Instead, this type of debt belongs only to the spouse who borrowed. A common example of separate debt is a debt incurred prior to the marriage. 

Oftentimes, couples use a prenuptial agreement to specify community and separate property. Moreover, the agreement can specify that debts acquired in the marriage are separate property.

However, it’s important to understand that when a debt only names one spouse, it does not make it separate. Typically, a debt acquired during the marriage is community debt.  

Community Debt

In order to develop debt division in Texas, it’s important to determine what is separate or community debt. This is because Texas is a community property state. That means that the majority of property spouses obtain in marriage falls under equal ownership, making it part of the marital estate. 

Marital estates include both assets and liabilities. That’s why debt can also be subject to division between divorcing spouses. As mentioned above, marital debt can include a mortgage, car loan, credit cards, and more. 

However, some debts are separate, following only the borrower in the divorce. Our family attorneys are available to help you resolve debt division in a divorce. 

What If My Spouse Incurred the Majority of the Debt?

How is debt divided in a divorce when one person bears the responsibility? Generally speaking, spouses in Texas divide debt equally. However, there are certain exceptions. 

Texas law requires that the divorce court divide liabilities and assets in a “just and right” manner. Across Texas, courts hold that “just and right” division doesn’t always equate to a 50-50 division. 

To decide this division, the court looks at a range of factors to determine what’s fair. With our family attorney on your side, you have an advocate to fight for a “just” division of debt. This is crucial when your spouse is the one responsible for running up the debt. 

Options for Dividing Debt

There’s no single answer to how debt is divided in a divorce. That’s why it’s important to have an experienced divorce attorney on your side. They can help you develop a strategy and pursue your best interests. 

Here are a few common options for dividing debt in a divorce. 

• One spouse takes on a larger portion of the debt because the other has primary physical custody of the children. 
• The couple decides to divide everything 50-50. 
• Each spouse assumes the debt attaches attached to the community property they receive. For instance, the car loan goes to whoever gets the car. 
• The couple agrees to sell off joint assets in order to pay off outstanding debts. 

Generally, courts approve agreements that spouses reach. However, when it’s not possible for a couple to reach an agreement, it’s common for the court to determine the division. 

In that case, the court holds a divorce hearing and decides how to divide debt and community property between the spouses. 

Creditors and Marital Debt

When it comes to dividing debt in a divorce, there’s another thing to remember. Regardless of what the divorce decree says about liability, the creditor might not agree. Let’s look at an example. 

• The court orders Spouse A to pay off one credit card and Spouse B to pay another. 
• Unfortunately, both credit cards are in both Spouse A and B’s names. 
• If Spouse B does not pay off the credit card assigned to them, the creditor has the right to pursue Spouse A for payment. 
• Additionally, if Spouse B fails to make payments, it can impact the credit score of Spouse A. 

The same applies to a mortgage in both spouses’ names, too. If the spouse agrees to pay off the mortgage, the lender can seek payment from either spouse. 

This is another instance in which a lawyer can help. Through legal action, they can help ensure that a debt one spouse refuses to pay doesn’t follow the other. 

Partner With an Experienced Divorce Attorney

So, how is debt divided in a divorce in Texas? Hopefully, you now have a better understanding. If not, that’s entirely okay. 

When you partner with an experienced attorney, you have an advocate to pursue your best interests. This applies to a personalized strategy for handing debt division as well as custody and other matters. 

At Universal Law Group, we strive to provide clear yet compassionate advice to our clients. Then, we offer aggressive representation to protect their interests. Schedule a consultation with our team today.