Will I Have to Take on My Ex’s Debt?
There is no “one size fits all” solution to dividing marital debts and assets in a divorce. However, it’s important to note that you may hurt your credit score or risk bankruptcy if you take on debt you cannot afford on your single income.
Texas is a community property state. This means that the court presumes that any wealth accrued or debt incurred during the marriage is part of the community property or marital assets. Under Texas family law, your debt is considered property. As property, the court will separate the debt as either belonging to one of the partners or as marital property.
Generally, both partners are liable for debt that is incurred while they were married. The court assumes that regardless of who actually spent the money, both were involved in the decision. This means that even if you don’t know anything about a debt your partner incurred, it becomes part of the marital assets and you may hold some liability.
However, Texas’s community property law is more complicated. The experienced San Antonio family law attorneys of Higdon, Hardy & Zuflacht, L.L.P. can help discern how much of your spouse’s debt you may be liable for.
Who Pays the Debt?
For debt or asset to be considered separate from marital property, it is up to the spouse to prove it was acquired with separate funds or separate credit. For example, even if both spouses sign a mortgage, one spouse may be able to prove that the property was acquired with their funds only.
The law separates any property that was owned before the marriage or acquired separately during the marriage as a separate asset or debt of that spouse. The law is more complex when a couple acquires assets while living in a noncommunity property state outside of Texas and later moves to Texas.
When the court splits the debts and assets, the debt will either be solely the responsibility of the husband or the wife, or it becomes the responsibility of both.
Is Your Name on the Debt or Loan?
However, irrespective of what the court decides, a debt collector can collect a debt from you if your name is on the loan agreement or you are otherwise legally responsible for the debt. For example, taking your name off the home or car title does not remove your name from the loan.
If the court assigns the debt for the car to your ex-spouse, but your name remains on the loan, a creditor can still come after you to collect the debt. Any joint account continues to be the responsibility of both parties. A debt collector or creditor is not interested in your divorce decree as this does not legally end your responsibility.
The same applies to a credit card. You may remove your name from a joint account, but it does not absolve your legal responsibilities for the debt incurred while your name was on the credit card. It only means you are not responsible for any charges made after.
Additionally, the creditor of one spouse can go after the assets or property of the other spouse if they are unable to make payments on their debt. In a community property state, the debts incurred during the marriage are considered joint debts. Creditors cannot sue both parties for any debt that is incurred after the divorce.
Protect Your Credit Score After Divorce
Couples can enter into a prenuptial or postnuptial agreement (before or after marriage) in which they agree that they will treat their debts and income separately. This makes good business sense if one spouse goes into business for themselves after they’re married. However, if one spouse already owns a business before marriage, signing an agreement doesn’t necessarily protect the other spouse from liability that is already owed at the time of the marriage. It only protects them from liability from any future business debts.
It’s important to protect your credit score during and after a divorce. Your credit score is used by insurance companies, lenders, and landlords to determine credit or interest rates. Watch your credit report every month and look for discrepancies. Your credit history may also show your spouse’s activity.
Protect Your Financial Future. Call Higdon, Hardy & Zuflacht, L.L.P. Today
When you are in the middle of a divorce, it can be difficult to remember all the details that will affect your future. Divorce can be emotionally and mentally overwhelming. You are faced with a myriad of decisions and details that could have life-long repercussions. You want a compassionate and experienced family law attorney to help protect your rights.
Fairly splitting the marital assets and debts is only one aspect of a divorce. The legal team at Higdon, Hardy & Zuflacht, L.L.P. can help support you through this trying time and guide you through many of the decisions you need to make. Child custody, spousal support, property division, and insurance coverage are just a few of the challenges that are common during a divorce.
Call our legal team today at (210) 349-9933 to schedule an initial, confidential consultation. You want the best representation to protect your rights and your future.