A divorce requires not only the division of marital assets but the division of liabilities as well. The community property presumption in Texas applies to both assets and debts. It is presumed that assets acquired during a marriage are the community property of the spouses. It is also presumed that when a spouse borrows money during the marriage or acquires property on credit, that the lender will look to be repaid from the community property of the spouses.
Dividing debt is not always as easy as dividing it straight down the middle: courts will often look at several factors when dividing debt to ensure a fair resolution. Any debts that were acquired before the marriage are considered separate property and will not be divided by the court; the spouse who incurred that debt will be responsible for paying the debt they incurred prior to marriage. Debt incurred after marriage is a little bit trickier to assign. If you took out a credit card in your name alone, on its face that debt is yours. However, a person is liable for the debts of their spouse (even if they incurred in their spouse’s name only) if the spouse acted as an agent for the person or if the spouse incurred the debt to provide necessary items for the person (ex: food, clothing, and shelter). Courts will also consider whether or not the spouses were wasteful in their spending (ex: spending lavishly, spending money to further an extramarital affair, and/or spending money to support a substance use problem).
If you and your spouse separate prior to filing for divorce, debts incurred by either of you after separation are still marital debts. Unless you and your spouse reach a settlement agreement regarding such post-separation debts, they can be subject to division by the court as well.
Dividing liabilities doesn’t end with a court order, either. If there is a debt in your name, but the court has assigned it to your spouse, you will likely still be on the hook for it if your spouse does not pay.
If you are contemplating divorce and are concerned about the division of your assets and liabilities, contact Kirker│Davis LLP to determine your rights and take steps to protect yourself.