While you may be thinking about the property settlement in your divorce in terms of which items and assets you would like to walk away from the marriage with, there is another side to the property settlement which deserves equal consideration. The debts that you and your spouse incurred during your marriage must also be divvied up, and the division of debts in a divorce is a matter which must be taken seriously because it can have an impact on your financial future.

Texas is a community property state, which means that anything which is acquired during a marriage belongs to both spouses equally. This principle applies to both assets and debts, and while both your assets and debts will be divided as part of your divorce, your property settlement is an agreement between you and your spouse. Unfortunately, that agreement between the two of you has no bearing on the interests of your creditors. Your property settlement will specify which of you is responsible for paying each debt, but it does not prevent creditors from pursuing payment from the other party, if the party who has been assigned responsibility for paying the debt dies or fails to make the payments.

There are a few strategies that divorcing parties can take regarding their debts, and how they will divide them in their divorce. One strategy is to pay off as many debts as they can before they divorce, so that there are fewer debts to divide in the property settlement. This strategy works well for couples who, while incompatible as a whole, are able to see eye to eye on financial matters or, at the very least, agree that it paying off debts instead of dividing them is a fair way to give both of them a lighter burden as they move forward into their new lives.

Of course, not all debts can be easily dispensed with before a divorce becomes final. Some big debts, like mortgages, must be dealt with, as well as some smaller debts, in cases where the parties do not want to pay them off prior to divorce or cannot afford to do so. In these cases, the party who is not responsible for paying a specific debt under the property settlement could contact the creditor to inquire about possible options for limiting or eliminating their liability for that debt. One option for removing one spouse’s name from a debt is a novation. With a novation, the spouse who will be keeping the debt submits application materials to the creditor to see whether they would qualify for the debt on their own. As you might imagine, novations are often hard to get because it is hard to qualify for mortgages and other loans with one income. Depending upon your financial situation, you and your spouse may have other options available to you regarding the debts that you currently hold.

The division of debts is an important element of the property distribution in any Texas divorce. Your Texas Family Law Attorney can help you to understand what your options are regarding the division of your debts, and help you to pursue a property distribution that will meet your current and future financial needs. If you have questions about the effect of divorce on your finances, or any other issues related to your divorce or family law case, please contact attorney Alex Tyra today, to schedule your free consultation. We can be reached at (903) 753-7499, or you may visit us online to submit a convenient online contact form.