Community property rules apply to debts as well as assets

On Behalf of | Aug 13, 2021 | Property Division

Divorcing couples in Texas frequently focus all of their energy on keeping what they want of the marital property. Under Texas’ community property laws, everything from the income you’ve earned to the vehicle you drive may be subject to division in your divorce. 

People often become so fixated on getting their fair share of the marital assets that they don’t stop to consider the practical impact of their shared debts on the property division process. Texas community property laws apply to marital debts, like student loans, medical debt and credit card balances, just as much as they do bank accounts and stock options. 

What happens to your debt when you file for a divorce in Texas?

Either you or the judge will make a decision about the debts

You and your ex may be able to factor in your debts when negotiating a property settlement. You might decide to have one spouse pay off certain accounts or just split the responsibility. You might even roll certain debts into the refinancing process if one spouse keeps the home. A judge can potentially approve any terms that you and your spouse agree upon, even if they deviate from how the courts would have ruled. 

If you don’t reach a settlement with your spouse, then a judge will have to decide how to split up your debt — and that could potentially be a problem if you feel like a 50/50 split would be unfair. Identifying which dots are community property and which ones are separate property and help you better negotiate for a fair property division outcome