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Dividing debt in a Texas divorce

Feb 15, 2021 | Divorce

When spouses divorce, they often focus on dividing the property they have: bank accounts, personal property and homes. However, millions of people have some amount of debt in the United States. Therefore, the chances are high that you will need to divide your debt, as well.

Dividing debt is similar to dividing assets in Texas divorces. However, there are some critical elements to understand that make it a little easier to know what to expect from this process.

Eligibility for division

Debts, like assets, are either community or separate property. In Texas, both spouses own community property jointly, even if one party bought something or took on debt during the marriage.

Upon divorce, the community debt is divided between parties. Debts incurred before you got married generally will remain with the individual.

Dividing the debt

Community property states like Texas generally divide debt equally between parties. However, in this state, the law dictates that the division of community debt be “just and right.”

Thus, it may make more sense for the individual who took out a loan or primarily benefitted from it to retain it in a divorce. Alternatively, a party might be responsible for more debt if they have far greater financial resources than the other party.

Complicating factors

If you have a single community debt, dividing it in your divorce may be straightforward. However, it is not so simple for people dealing with complicating factors.

For example, individual debt can become community debt through the blending of assets. And refinancing the debt can affect categorization, as well. Further, you might have a prenuptial or marital contract that can complicate debt division during divorce.

Because of these factors, and because debt is just one component of the property division process, having legal guidance as you navigate this issue can be critical.