Property division is one of the most important aspects of divorce. Spouses must separate their lives after sharing them for years. The focus during property division discussions is often on high-value assets, such as the marital home or retirement savings accounts.
The division of marital debt is also critical to the long-term financial stability of each spouse. Those preparing for property division negotiations or expecting to litigate property division matters in Texas family courts need to understand how state community property laws may affect the distribution of debt during divorces.
Dividing debt evenly isn’t mandatory
To many people, community property laws are synonymous with a 50/50 split of the entirety of the marital estate. In Texas, judges hearing property division disputes should start with a presumption that an even split is appropriate. However, spouses can present evidence showing that an uneven distribution of property is what is truly just.
The division of debt is not separate from the division of marital property. Instead, the division of debt can influence the division of property and vice versa. Spouses may need to determine which debts are marital and which ones may be separate.
Debts taken on before the marriage may remain the separate obligation of one spouse. Debts that one spouse hid from the other intentionally and debts taken on for purposes that damaged the marriage or with the intent to diminish the marital estate may also be separate from the pool of marital property and debts.
Spouses preparing for divorce may need to do a thorough review of financial records to determine how much debt is marital. They may then need to explore solutions that offer optimal long-term protection. Some couples intentionally liquidate marital resources to pay off marital debts so that neither carries a balance after the divorce.
Other times, a higher-earning spouse may take responsibility for more debt. Spouses can also use responsibility for debt to balance the retention of property in a divorce. Every marital estate is unique, which means there is no straightforward solution or formula for fairly dividing debt in a Texas divorce.
Reviewing financial records and disclosure paperwork with a divorce attorney can help spouses evaluate their options. Spouses can settle their property and debt division matters privately or can ask a judge to review the marital circumstances and determine a fair way to divide responsibility for marital debt.
