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Dividing Debt in a High Asset Divorce

Posted on in High Asset Divorce

Texas divorce attorneyWhile many people think that the property division process during divorce only involves splitting up assets, such as bank accounts, the family home, or personal property, the reality is that those who are going through a divorce must also divide debt. Like assets, debts are divided based on their status as either community property or separate property, as well as a number of other factors, making it especially important for the divorcing parties to have a firm understanding of the origins of their debts. To ensure that you aren’t saddled with debt that is your spouse’s responsibility, please contact a high asset divorce attorney who has the resources and experience necessary to help you reach a fair settlement.

Marital Debt

Although it is true that debts incurred by one spouse during a marriage are generally presumed to be community property debt, which means that they must be divided equitably upon divorce, Texas law also takes other factors into account when dividing debts. For example, debts incurred during marriage could end up being the responsibility of one spouse if he or she solely incurred the debt. If, for instance, one spouse took out a credit card in his name during his marriage, he will most likely be held solely responsible for that debt, but only if the debt was used to purchase items from which only he benefitted. If, on the other hand, the debt was used to buy necessities, then the debt holder’s spouse becomes indirectly responsible for them, regardless of whether his or her name is actually attached to the debt. What qualifies as a “necessary” depends on the specific circumstances of a case, although at a minimum, necessaries include the following:

  • Food;
  • Clothing;
  • Shelter;
  • Non-elective medical care; and
  • Legal fees.

Another exception exists if one spouse borrows money on the other’s behalf and at his or her request. If the spouse who incurred the debt did so as the other spouse’s agent, then that individual can be held indirectly responsible for paying the debt. Debts incurred prior to a marriage are treated as separate property, making them the sole responsibility of the original debtor, so if one spouse took out a student loan before entering into marriage, then he or she would be solely responsible for paying it off after the divorce.

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In many ways, dividing marital debt is more complicated than dividing assets, as it requires an analysis of management, as well as ownership, making it extremely important for those with substantial debts to speak with an attorney before agreeing to a settlement. If you are considering divorce and have questions about how your debts will be divided, please contact the Law Offices of William D. Powers to speak with a dedicated Leander high asset divorce attorney who can explain your rights and obligations.

 

Source:

http://www.statutes.legis.state.tx.us/Docs/FA/htm/FA.2.htm

The Law Offices of William D. Powers

8911 N. Capital of Texas Highway, Building 2, Suite 2105, Austin, TX 78759