Debt division in a Texas Divorce

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Family Lawyer Houston: Even if you don’t know much about getting a divorce in Texas it is likely that you have heard that 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 then it is likely to be termed as 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 find out whether or not the same rules apply to marital debts? Debts are the 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 too 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

Divorce Lawyers Houston: Any debt or liability that is associated with a piece of property or with a person will go to that person in a divorce, most likely. Of course, there are individual circumstances and scenarios that can play out where this general rule may not apply but for the most part if a debt is in your name or if a debt is attached to a piece of property that is in your possession or management then it’s your responsibility.

For instance, when you financed your car you likely sat down at a car dealership, bank or credit union and signed a financing agreement where you became obligated to pay money towards the debt owed to a lender/creditor.

This is an example of a fairly straightforward situation where you are currently on the hook for a 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

Family Attorney Houston: The previous section of this blog that covered instances where you are directly responsible for debt hopefully made sense fairly quickly. You sign paper, you become liable. This is a pretty straightforward lesson to learn. What about situations that 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 subject. Under the Texas Family Code, you can become personally liable for the debts of your spouse in the event that your spouse has acted as your agent in incurring the debt or 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 he or she has acted as your agent. You must have specifically laid out what authority was being given to him or her. Your spouse would not be able to simply argue that by virtue of the fact that you two are married that he or she has your authority to enter into contracts that create a debtor-creditor relationship.

A DISCUSSION ON WHAT IS A “NECESSARY”

Divorce Attorneys in Houston: What a necessary item is for you and your spouse may not count as a necessary item for my spouse and myself. However:

1. food
2. shelter
3. clothing and
4. medical care

Almost assuredly are necessary items across the board for any family in Texas.

Who actually is on the hook for a debt associated with a “necessary” upon the divorce of you and your spouse depends on who is actually exercising control over said property. Let’s recall from prior blogs of ours that both you and your spouse are solely responsible for and manage:

1. both of your separate property, respectively as well as
2. those items of community property that would have been considered to be separate property had you and your spouse never gotten 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 income derived from your separate property is what I have in mind.

This community property is “special” and would be counted among those sorts of property that ordinarily would be separate in nature had your marriage not occurred. All other community property is subject to joint control of both you and your spouse in all circumstances- absent a pre or post-marital agreement.

WE WILL CONTINUE OUR DISCUSSION ON DEBT TOMORROW

Houston Divorce Attorneys: I have more to discuss with you all on the subject of debt and divorce so please join me tomorrow when we pick back up with 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 … Continue Reading