Going through a divorce can be a traumatic, hectic affair. From taking care of kids, to splitting shared property, couples face many questions as they attempt to go their separate ways. Understanding the details is critical to breaking ties as amicably as possible. When it comes to dealing with debt after divorce responsibly, it’s best to get informed. Taking the time to contact a Texas debt consolidation company can help steer you in the right direction as you pursue divorce when there is debt involved.
How might a Texas divorce court decide to split a couple’s debt? It all depends on the circumstances of the relationship in question, but looking at the law offers some key insights. Here are a few facts that debt-holding consumers need to be aware of before filing for divorce.
The State of Debt in Texas
Texas is famous for its robust economy and high employment rate. In reality, however, consumers don’t seem to enjoy the same benefits that the corporate sector does. According to some experts, Texans are among the nation’s worst in terms of low credit scores, and the state’s notoriously lax consumer protection laws may be partially to blame.
Even though most Texans carry less debt than the national average, certain types of debt have proven particularly problematic for Longhorns. Mortgages, credit card balances and student loans are serious issues for many married couples.
Divorces and Debts
When people decide to get a divorce, there are a number of ways to move forward. Provided that they meet the state’s six-month residency requirement, either spouse may file a Petition for Divorce at a District Court. This is different from getting a marriage annulled, or declared void on the grounds that it should never have occurred in the first place because of things like fraud.
Like many other states, Texas allows people to prepare their own separation plans for how they’ll split property and shared debt. The courts also have the power to make binding declarations regarding the final disposition of outstanding liabilities, such as unpaid bills.
Marital Property Explained
Texas law recognizes the concept of community property, or property that both spouses own jointly. This property gets divided up by the court before the finalization of a divorce, whereas separate property usually goes to the spouse that originally owned it. For instance, if a woman already owns a truck when she gets married, she’ll most likely get to keep the vehicle after a divorce. If she or her spouse bought another car while they were together, then they’d either have to reach an agreement on how to split it or leave things up to the judge.
Community property comes in two types: joint and special. Joint property is the standard property that both parties own, but special property is community property that would have belonged solely to one spouse had the marriage never occurred. For instance, a person’s salary or lawsuit winnings are special property. As a form of community property, special property can still be managed by either spouse.
Who Owns Marital Debt?
Texas maintains a fairly consistent stance on debt: In most cases, spouses aren’t deemed responsible for their partner’s liabilities. Notable exceptions to this standard include when someone acts as their spouse’s legal agent or their spouse took on debts to pay for certain essentials.
Debt after Divorce in Real Life
A bank, lender or other creditor that signs a contract with an individual can take that person’s separate property. They can also come after their special community property and the couple’s joint community property. They can’t, however, touch the spouse’s special community property or separate property.
Things are different when the creditor is seeking money after winning a lawsuit against a married Texan. Although each case is unique, these tort creditors may be entitled to everything but the spouse’s separate property.
Key Takeaways for Debt after Divorce
Texas divorce laws have a few noteworthy impacts:
- People’s post-divorce debt rights depend on when and how they got their property. The type of creditors they face is also important.
- Texans who want to move on with their new lives might discover that they can’t always make a clean break because things like lawsuit judgments and settlements are chipping away at their assets.
- Debt-heavy individuals may have problems if they suddenly find themselves entirely responsible for paying bills off without a second income.
Working with a Texas debt consolidation professional may make it easier to face the realities of life after a divorce. To learn more about the options and explore ways to overcome debt, get in touch with one of our specialists at Christian Debt Counselors.