How Does the Allocation of Debt Work in Texas Divorce Cases?

A 50-50 property division is common in Texas divorce cases.

Most people know that Texas is a community property state. Generally, community property laws require a 50-50 division of all marital debts and assets, regardless of the facts. Texas is different. The Lone Star State is basically a presumptive community property state. In some cases, the court could order an unequal division of debts and/or assets. Furthermore, only community property is subject to such division.

Premarital agreements often come into play in these situations Most judges uphold most property agreements unless they are blatantly one-sided or one signing party did not have an equal voice in the process.

A Ft. Worth family law attorney is an important partner throughout the process. Attorneys help ensure financial stability for your family for years to come. We always look for cost-effective, long-lasting solutions that make a real difference in your life.

Classification

The general classification rule is deceptively simple. Assets and debts acquired before the marriage or by gift are community property, and everything else is separate property. 

However, divorce is rarely simple. The average marriage that ends in divorce lasts a little more than seven years. Over that time, community and separate debts often become commingled. For example, Husband might use money from his paycheck (community asset) to pay his student loans (separate debt). When the couple divorces, the community estate, and therefore Wife, may be entitled to partial reimbursement.

Asset commingling issues are more common. Assume Wife bought a dilapidated fourplex shortly before the marriage. All units were vacant and the property had almost no value. Then, Husband, who operated a construction firm, upgraded the house. At the time of the divorce, all four units were occupied, people were on a waiting list, and the property’s market value had skyrocketed.

When the couple exchanged vows, that fourplex was clearly Wife’s separate property. At the time of divorce, depending on the additional facts, the fourplex might have been Wife’s separate property, community property subject to division, or Husband’s separate property. Likewise, all future income (and liabilities) might be Wife’s separate property, community property subject to division, or Husband’s separate property.

Property classification not only affects the division of the marital estate. It could also affect alimony and child support amounts.

Division

The 50-50 debt division presumption in Texas family law is very strong. However, in some cases, the judge might divorce property based on several factors, such as:

• Earning Capacity of Each Spouse: Usually, younger, well-educated people with strong work backgrounds can earn more money than ill, older people without much education or work experience.
• Noneconomic Contributions to the Marriage: This factor, which is closely related to the previous one, is especially significant if one spouse gives up a promising career or lucrative job to be a full-time caregiver.
• Separate Property Awards: As mentioned above, community debt division does not take place in a vacuum. Separate property awards, especially income-producing property awards, are highly relevant.

Frequently, attorneys negotiate setoffs in these situations. For example, Wife might agree to pay a greater portion of community debts if Husband agrees to take less of her 401(k) plan.

Reach Out to a Diligent Tarrant County Attorney

Community debts are usually, but not always, split 50-50. For a free consultation with an experienced family law attorney in Fort Worth, contact the Law Office of Kyle Whittaker. Convenient payment plans are available.