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Debt Division During Divorce

In Texas, divorcing spouses’ assets and debts are both subject to division according to the principles of community property. “Community” debts must be divided based upon what is “just and right;” and, while this often means a 50/50 distribution, there are numerous issues that can make the process quite a bit more complicated.

At Nordhaus Walpole, PLLC, we provide experienced legal representation for divorcing spouses in McKinney, TX. With years of experiencing handling complex property and debt distributions, we are intimately familiar with the various unique and challenging issues involved. If you are preparing to go through a divorce and have questions about how getting divorced will affect your debt (or your credit), please contact our McKinney divorce lawyers to schedule a free initial consultation. Our attorneys can explain everything you need to know, and we can help you make informed decisions as you get ready to start the divorce process.

Debts Subject to Division in a Texas Divorce

Similar to real estate and personal property, “community” debts are subject to division in a divorce, while “separate” debts remain the sole responsibility of the debtor-spouse. Debts that either spouse brought into the marriage will generally be considered separate, while debts incurred during the marriage – whether by both spouses or by one spouse individually – will typically need to be addressed during the divorce process. This applies to all debts, including:

  • Car loans
  • Credit card debt
  • Home equity lines of credit
  • Mortgages
  • Personal loans
  • Retail financings
  • Student loans
  • Tax debts
  • Unpaid alimony or child support from a prior relationship

Oftentimes, it will make the most sense for the spouse who keeps an encumbered asset to also take on sole responsibility for the associated debt. For example, the spouse who keeps the family home may also agree to take sole responsibility for the mortgage. However, if the mortgage is in both spouses’ names, this may not necessarily be as easy as it sounds (i.e. if the bank refuses to refinance based on one spouse’s credit), and it may be necessary to consider other more-creative alternatives.

Similar to the division of community property, divorcing spouses are free to structure their debt division in almost any way that they find mutually agreeable. In order to avoid future issues with regard to joint debts that cannot be fully divided, to the extent possible, it may make sense to use community assets to pay off certain debts at the time of divorce. Or, if it is not possible to divide the spouses’ debts equitably under the circumstances, one spouse may agree to take a smaller share of community assets in order to also receive a smaller share of community debts.

Nordhaus & Nordhaus: The McKinney Divorce Lawyers You Need

There are numerous potential ways to divide debts in a Texas divorce. For legal advice tailored to your unique personal and financial circumstances, please contact our McKinney divorce lawyers to arrange a free initial consultation. You can reach our McKinney, TX law offices at (214) 726-1450, or send us your contact information and we will be in touch as soon as possible.

Hear What Our Clients Have To Say

"Myself and my husband recently relocated to Texas and had to make a new will. We consulted with April Nordhaus regarding wills, probates and creating a revocable trust. April made a very difficult subject easy and straight forward. With April's help we successfully created a will and a revocable trust. April was really thorough in talking us through it. She explained everything in an easy to understand language with warmth and personality yet still maintaining a high standard of professionalism. We highly recommend April Nordhaus."
Sandra Cason