Most divorce conversations focus on what each spouse gets: the house, the trucks, the retirement accounts. But what each spouse owes matters just as much. A divorce that leaves you with a fair share of assets and an unfair share of debt isn't a fair divorce.
Debt is also tricky in a way property isn't. Your divorce decree binds you and your spouse, but it doesn't bind the bank. Here's how Texas courts handle debt and how to protect yourself.
How Texas courts divide debt
Texas divides the community estate in a way that is "just and right." Debts are part of that picture. When a judge decides who gets the house or the car, the judge also considers who will pay what's owed on it. A spouse who receives more debt may receive more of the assets to balance things out, and vice versa.
Debts incurred during the marriage are generally treated as community debts, but not always. Courts may look at who incurred the debt, what it was for and whether it benefited the family. A debt run up on a secret card for an affair, for example, may be assigned to the spouse who ran it up. Debts from before the marriage are usually assigned to the spouse who incurred them.
See our article on the division of assets in a Guadalupe County divorce for the factors judges weigh in the overall division.
The big problem: creditors aren't bound by your decree
This is the single most important point about debt in a divorce. Your decree can say "Husband shall pay the Visa card," but if both of you signed for that card, the credit card company can still come after either of you. The creditor wasn't a party to your divorce. Its contract is with whoever signed the loan or card agreement.
So if your ex stops paying a joint debt that the decree assigned to them:
- The creditor can still report late payments on your credit.
- The creditor can still pursue you for collection.
- Your remedy is against your ex, through the divorce court, not against the creditor.
The safest way to handle a joint debt is to get your name off it. Pay it off, refinance it into one name, or sell the asset that secures it. Relying on the decree alone leaves you exposed.
Common types of debt
Mortgages
If one spouse keeps the house, the decree should require that spouse to refinance the mortgage into their own name by a specific deadline. If they can't qualify, the decree can require the house to be sold. A mortgage left in both names after divorce ties you to your ex for years and can keep the departing spouse from qualifying for a new home loan.
The departing spouse often signs a deed transferring the house, and the decree may give them a lien to secure payment of their equity or to protect them if the other spouse defaults. Our article on when a marital residence can be ordered sold covers options when nobody can afford to keep it.
Car loans
Vehicles are usually awarded with their loans. The spouse who keeps the truck pays the truck note. If both names are on the loan, refinancing is the cleanest solution. The decree should also address title transfer and insurance.
Credit cards
Credit cards come in a few varieties, and the distinction matters:
- Individual cards in one spouse's name: only that spouse is liable to the creditor, though the debt may still be community and considered in the division.
- Joint cards: both spouses are liable to the creditor.
- Authorized-user cards: the authorized user generally isn't liable to the creditor, but should be removed from the account.
Paying off joint card balances during the divorce, often from the sale of an asset or from savings, and then closing the accounts is usually the cleanest approach.
Other debts
- Student loans taken out during the marriage may be considered community debt, though courts often assign them to the spouse who got the education.
- Tax debts from joint returns can follow both spouses. The decree should say who pays any taxes owed for years you filed jointly.
- Medical bills, personal loans and business debts all need to be listed and assigned.
Indemnity: your protection against your ex
A well-drafted decree includes an indemnity clause (sometimes called a "hold harmless" provision). It says that each spouse will pay the debts assigned to them and will reimburse the other spouse for any loss, including attorney's fees, if they don't.
If your ex fails to pay a debt the decree assigned to them and the creditor comes after you, the indemnity clause gives you a clear basis to go back to court to recover what you paid. It doesn't stop the creditor from pursuing you, but it gives you a remedy. Our page on modification and enforcement explains how decrees can be enforced after divorce.
Steps to take during the divorce
- Pull your credit reports. Look for every account in your name, including ones you forgot about or didn't know existed.
- Make a list of all debts, with balances, monthly payments and whose names are on each.
- Keep paying the minimums on joint debts during the case, or make sure temporary orders say who pays what. Late payments hurt both of you.
- Don't run up new debt on joint accounts, and check whether a standing order or TRO restricts new borrowing.
- Freeze or close joint credit lines so no new charges can be made, if you can do so without violating an order.
- Plan refinancing early. Get pre-qualified so you know whether keeping the house or car is realistic.
| Debt | Best way to protect yourself |
|---|---|
| Joint mortgage | Refinance or sell by a set deadline |
| Joint car loan | Refinance into the keeping spouse's name |
| Joint credit card | Pay off and close, or transfer the balance |
| Spouse's individual card | Assign in decree; remove yourself as authorized user |
| Past joint tax years | Decree language on who pays any balance due |
What about bankruptcy?
If your ex files bankruptcy after the divorce, some obligations from the decree may be affected, while others, like child support and spousal maintenance, generally can't be discharged. Bankruptcy and divorce interact in complicated ways. If either spouse is considering bankruptcy, it's worth getting advice about timing before the decree is signed.
Getting help
Attorney Jesus R. Lopez helps divorcing spouses in Seguin and throughout Guadalupe County inventory their debts, negotiate a fair division and draft decrees with clear deadlines and indemnity language. For more on reaching a balanced agreement, read fair settlement in a Guadalupe County divorce. Free consultations are available in English or Spanish.
Frequently asked questions
Am I responsible for my spouse's credit card debt in Texas?
To the creditor, generally only if you signed for the card or it's a joint account. In the divorce, though, debt incurred during the marriage may be treated as community debt and considered when dividing property.
My ex isn't paying the debt the decree assigned to them. What can I do?
Pay what's needed to protect your credit if you can, keep records and ask the court to enforce the decree. An indemnity clause can let you recover what you paid plus fees.
Can the decree take my name off the mortgage?
No. Only the lender can release you, usually through a refinance or payoff. The decree can require your ex to refinance by a deadline.
Is debt always split 50/50?
No. Texas divides the community estate in a just and right way, and debts are assigned with that overall fairness in mind.
Have questions about your situation? Talk with a Seguin divorce lawyer. Consultations are free, by phone or in person, in English or Spanish.
Related guides
This article is general information about Texas law, not legal advice for your situation. Laws change, and every case is different.