Debt in divorce court: what to expect and what to avoid

As part of a divorce settlement or judgment in Texas, a couple’s assets and debts get divided. What follows is a brief overview of what you should know about marital debt.

What can happen

The court considers both spouses liable for all debts incurred during the union. The court can decide to split the debt or determine which person accumulated the debt and should be responsible for it.

Unfortunately, this may not align with how lenders see the situation. If the soon-to-be ex-spouse gets the house, the lender may still hold both parties responsible for mortgage payments. That means if the spouse defaults on the mortgage, the lender can hold both spouses accountable.

This view means that any delinquencies in payments may impact both spouses’ credit scores. You may not be able to get new credit cards, loan approvals or good interest rates.

Ways to approach marital debt in a divorce

There are multiple ways to handle shared debts. Your divorce attorney may recommend one of these strategies:

  • The spouses can sell joint property and use proceeds to pay off outstanding debt.
  • One spouse can argue for larger shares of assets in exchange for paying off debt.
  • One spouse can negotiate larger spousal support for taking on the debt.
  • The spouses can divide all debt and property equally with each spouse taking on 50% of all debt.
  • If there are children, one spouse pays off the larger portion of marital debt in return for child support and spousal maintenance.

Before going into a divorce, it’s important to have your lawyer review your financial standing. You will need an appraisal of spousal liabilities and assets.

How the court thinks

The court knows there’s no one-size-fits-all answer. They will apply general applications for making decisions should couples be combative. This is something you want to avoid because the court process takes longer and is more expensive than negotiating outside of court.