People who are going through a divorce generally need to divide their marital property. In Texas, judges called upon to resolve any disputes that spouses can’t overcome without going to court employ a community property standard when engaging in this kind of division. This means that martial property is generally considered to be owned equally by both spouses, unless a narrow exception to this rule applies.
Some people don’t realize that they also have to divide any joint debts leftover from the marriage. There are several considerations that anyone going through a divorce should consider in this regard.
Debts may be paid by selling assets
Equally dividing assets can be complicated; however, some parties use debts to balance out a broader division scheme. Another option is to sell off assets so the profits from those assets can be used to pay off debts.
If the debts are paid off during the property division process, both parties can start fresh after the divorce. They won’t have to worry about whether their ex will pay off the debts they’re supposed to pay because they’ll already be taken care of before the divorce is finalized.
Credit can be affected by debt division
If there aren’t assets that can be liquidated to pay off marital debts, the debts will have to each be assigned to an individual. Creditors don’t have to abide by that order. If an account is a joint account in the names of both divorcing parties, a creditor can still hold them both accountable for the balances. This is because the creditor at issue wasn’t a party in the property division process.
A person’s credit can suffer considerably if their ex is assigned to a debt and doesn’t pay it. This can make it hard to make build a strong credit history post-divorce. As such, moving accounts to each individual’s name is important.
Understanding the ins and outs of the property division process may help people in this situation to make decisions in their best interests. Seeking the assistance of a legal representative can help them to learn their options and determine how best to proceed.