Some couples find it easy to settle financial matters at the end of a marriage. Some divorcing couples have pre-existing contracts with one another. Prenuptial and postnuptial agreements may facilitate relatively amicable property division proceedings. Couples with marital contracts have already set terms with one another for sharing ownership of their assets and dividing responsibility for their financial obligations.
They are in a strong position to pursue an uncontested divorce. Unfortunately, many couples preparing for divorce proceedings do not already have written agreements with one another. Instead, they have to settle their disputes in the early stages of divorce or prepare for litigation. Without an agreement, community property rules apply to the marital estate.
Any income and assets spouses have and most of their shared debts are part of the marital estate. Sometimes, spouses open joint accounts that have both of their names on the invoices. Other times, each spouse might have a handful of credit cards in their own name. In either scenario, spouses can expect to share responsibility for the debts that they took on during the marriage.
Dividing debts can be a challenge
Community property statutes extend a presumption of an even interest in the marital estate that either spouse can rebut during litigation. Frequently, the focus is on the retention of assets. However, spouses may also need to negotiate issues related to their credit cards and other financial obligations. Credit card debts and other financial obligations are also part of the marital estate and are subject to community property rules. Without an agreement, they may have to take on half of the marital credit card debt. How do spouses share their debts when dividing their community property?
Every couple has unique financial needs
Sometimes, each spouse might agree to take responsibility for the accounts in their own names. Other times, they might use shared property, such as home equity, to pay off their joint financial obligations. Those attempting to negotiate a fair division of marital debts need to consider the possibility of a spouse defaulting or filing for bankruptcy. When that happens, the family court order does not prevent creditors from pursuing collection efforts against the spouse who is technically not responsible for those debts.
Debts can be as important as assets when spouses seek to address their financial matters at the end of a marriage. People trying to negotiate settlements that include their credit cards and other financial obligations may need assistance pursuing terms that don’t leave them vulnerable in the future, and that’s okay. Learning more about community property rules can be beneficial for those preparing for divorce in Texas.