21 Mar What Happens to my Property and Debt in Divorce?
There is a lot that must be decided when a couple divorces. Other than children, property split is the next big thing to determine. In addition to property, there is one more aspect that people might not think of right away – debt.
According to a 2021 CNBC report, the average American has $90,460 in debt. Debt can come in many forms. Many Americans have student loan debt and credit card debt. Some may have medical debt. And if you own property, chances are you have a mortgage.
What happens to that debt when you divorce? Does the type of debt determine where it falls after the split? We’ll go into it below.
Property: How is it Defined?
Property can include a myriad of things, including:
● A business
● A home or other real estate
● Retirement accounts
● Furniture and other possessions
There are two types of property to consider when getting divorced: community and separate.
Community property encompasses all property that you and your spouse have at the time of divorce. The exception to this rule is if a spouse can prove that something is separate. Using a certain spouse’s earnings to purchase the property is not proof that the property is separate.
Separate property is a property that does not belong to both spouses. This includes property that was received as a gift or inheritance during the marriage, property that was owned or claimed by one spouse before the marriage, stock dividends and capital gains on the separate property investments of one spouse, and money that one spouse received for personal injuries that happened during the marriage. It is important to note that some of these need to have happened outside of the marriage, while others can occur during.
In Texas, if both spouses don’t agree that the property is separate, there must be clear and convincing evidence to prove this. Otherwise, it is considered community property.
Property: How is it Split?
Community property has to be divided during a divorce. It is not necessarily split in half. Instead, it is divided in a way that is “just and right.”
Separate property cannot be split and stays with the spouse who has ownership.
Debit: How is it Defined?
Debt has the same two categories that property does: community and separate.
Community debt is all debt that you or your spouse acquired during the marriage. This includes things such as credit card debt and a mortgage, regardless of who racked the debt up.
Separate debt is debt that one spouse entered into before they got married.
Debt: How is it Split?
Similar to property, community debt must be split, but divided in a way that is just and right. This many times means 50/50, but not always. When it comes to separate debt, such as student loan debt, courts tend to let the debt stay with the incurring spouse.
The Final Decree
When a divorce decree is made, the property and debt split is included. The decree will list:
● Community property that each spouse will keep
● Community property that will get sold and how the proceeds will be split
● Separate property
● Debts each spouse needs to pay
● How all retirement benefits will be paid out – either divided or not
When it comes to all splits, a judge can approve an agreement you have with your spouse as well.
Do I need an Attorney?
Having an attorney go through your assets and debts with you is recommended. They can ensure that the split is just and right. Plus, if you want to negotiate with your spouse for a differing split, an attorney can help.
Attorneys can also help you navigate any fears you may have with this part of the divorce. They can guide you through the process and advocate on your behalf. If you are getting a divorce, contact Navarette Bowen P.C. We have a team of experienced divorce lawyers that can help. Our main office is located in downtown Denton. Contact us to set up a confidential consultation to discuss your circumstances and receive guidance.