Finances are usually the most contentious issue in a divorce. Because TX is a community property state, this means that properties and assets acquired during the marriage are shared between the spouses. Many people think that debts are considered community property in TX as well. But this is not entirely accurate.
In Texas, the liability or debt attached to the asset is assigned to the spouse who is responsible for the debt or manages the asset. Spouses can be liable for a debt indirectly or directly.
The Importance of Direct and Indirect Liability in a TX Divorce
When a spouse signs any contract that legally obligates them to pay a creditor money, they become directly liable for that debt. To illustrate, say you bought a car and signed a financing agreement with the auto dealer. Your soon-to-be-ex spouse did not. This means that you are solely and directly liable for that debt.
Indirect liability is more complicated. Under TX law, a spouse is personally responsible for the acts of their spouse if the spouse acts as the other spouse’s agent or they incur debt due to necessaries. It’s crucial to note that a spouse doesn’t act as the other spouse’s agent solely because they are married.
This means that a spouse could only get stuck with the liability of a debt that their soon-to-be-ex-spouse incurred if they gave their spouse authority liability for the debt on their behalf or if that debt is “necessary.” But what’s necessary in your case isn’t the same as what’s necessary in another person’s case, it generally means food, shelter, medical care, and clothing.
Can Property Be Used to Pay Off Shared Debts?
Generally speaking, the spouse that manages an asset determines which property can be used for paying off debts during a divorce. Except for homestead property, each spouse solely controls, manages, and disposes of the following:
- Their separate property
- Any community property that would’ve been their separate property if they never got married
For number two, community property can be your salary, money awarded in a personal injury lawsuit, and revenue from separate property. This is known as special community property.
The rest of the community property will be subject to the spouses’ joint control, management, and disposition. But spouses can create a written agreement during their marriage to turn any community property into special community property.
Reach Out to a Skilled TX Divorce Attorney Now
Whether you are considering divorce or having issues with shared debts after your divorce, the compassionate and knowledgeable TX divorce attorneys of Hoelscher Gebbia Cepeda PLLC are here to guide you. We can advise clients to explore all available options for protecting and repairing their finances during, after, and before a divorce.
Knowing what could possibly happen to your debts after getting divorced can help you understand your responsibilities and rights. To find out more about your specific case, please call our office at 210-222-9132 or send us a message online to schedule a consultation with our TX divorce attorney now.