Couples divorcing in Texas have to consider how the division of property and assets will be done. Debt is also split in a divorce, so it’s important to know what to expect.
How is debt divided?
Texas is a community property state, which means that everything within the marriage is divided evenly. Just like assets are divided 50/50 among spouses in divorce, debts are also divided that way. All financial information from both spouses should be presented to determine whether the debt was equally incurred.
Certain types of debt are addressed differently. There is also the factor of whether one spouse incurred the debt prior to the marriage. In that situation, it would be that solely person’s responsibility.
Common types of marital debt
Credit card debt is a common type of marital debt. If divorcing spouses have a joint credit card, both are responsible for paying back debt on it regardless if one used it more.
If you are a cosigner on your spouse’s credit card account, your spouse would be the one responsible. However, if they can’t pay back the debt, it might become your responsibility if you keep your name on the account. You can only remove your name as a cosigner if your spouse agrees to it.
With car loan debt, you can refinance the loan as long as the lender approves. You also have the option of paying off the balance on the loan or selling the vehicle. The judge might order automatic payments made toward paying off the car loan.
The judge might decide that one spouse should be responsible for the mortgage if the couple has a home. This can be complex and might require the help of a professional. The divorcing couple might want to consider selling the home if paying the mortgage is a challenge and both spouses are named on it.
Being smart and taking an inventory of all debts can help you during a divorce. The goal is to pay off as much debt as possible and avoid getting stuck with more than you should be responsible for.