When we talk about financial matters in a Texas divorce, we often talk about dividing assets fairly and developing plans for couples to keep illiquid assets intact. But that’s not the reality of every divorce – in fact, a great number of couples who are concerned with financial matters in divorce are concerned with debt and how to divide it fairly. This is no different, of course, when couples plan to get an online Texas divorce.
Perhaps the most challenging issue regarding debt and divorce comes when one party has debt solely in his or her name. Let’s say, for example, the wife in a Texas divorce case has a credit card in her name, and she’s run it up to its $10,000 maximum. And let’s say that most of that debt was incurred for household expenses – goods and services that both the husband and wife have used over the course of the marriage.
The good news is that a divorce decree can address who takes on what debt in a divorce – so if the husband decided to take that credit card debt on as part of the settlement, that could be written into the final decree.
But the bad news is that, regardless of what’s in a Texas divorce decree, the person whose name is on the account is still legally responsible to pay off that debt. If the now-ex-husband has agreed to pay down the credit card debt in the decree, and doesn’t, the credit card company will continue to go after the wife, since she’s the only person whose name is on the account.
And because Texas law states that a divorce decree can’t alter the rights of a third-party creditor, the now-ex-wife in our example is still on the hook for the debt. Showing the credit card company the divorce decree will not have any effect on the situation – the credit card company will continue to attempt to collect from her and only her.
While she would have no legal recourse immediately, there’s one route she could take – since she and her now-ex-husband have a legal agreement that he’ll pay the debt, she can pay down the debt herself and then sue him for breaching their agreement. In this case, she could win back what she paid to the credit card company – but, in the meantime, she has to incur that expense on her own, and can only involve the courts once it’s paid off. And, of course, it means hiring a lawyer.
If there are assets available or about to become available prior to the divorce, another option is to make every effort to pay off these debts with those existing or soon to be existing assets (sale of a house, for instance) instead of relying on one party paying the other based on the divorce decree. Doing it then and there may help safeguard divorcing couples against future conflicts and future legal proceedings.