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Separate versus community property handled differently in Texas

With nearly 40 to 50 percent of marriages ending in divorce, it probably does not come as a surprise that some spouses break up and find themselves with a financial mess on their hands. After all, just as spouses end up accumulating assets together during the course of the marriage, they also accumulate debt. Determining what is separate versus community, or shared, property during the property division process in Texas can understandably be challenging.

Texas is one of only a handful of states that adhere to the community property rule. In these states, all assets that two spouses have accrued while married will be split 50/50 by the court. This is the opposite of what happens in an equitable distribution state, where a judge will split the assets in a manner that he or she deems to be equitable or fair.

In addition, when it comes to debt, both spouses in a marriage are ultimately responsible for the debts accumulated over the course of the marriage no matter how these debts were held. Therefore, if one of the spouses ran up credit card debt secretly, this debt is the other spouse's responsibility as well. This is different from what happens in an equitable distribution state, where a spouse who opens a credit card account in his or her name only assumes full responsibility for the debt by himself or herself.

In Texas, if two spouses are willing to find common ground when it comes to the division of their assets and debts, they may be able to avoid further court intrusion. They can tackle property division through divorce negotiation or mediation rather than going to divorce trial, which can be more stressful and costly. However, if they cannot reach a mutually satisfactory settlement, they have no choice but to go before a judge and have the judge determine for them how to split their assets and debts based on Texas's laws governing separate versus community property.

Source: wisebread.com, "What Happens to Debt After Divorce?", Holly Johnson, March 30, 2018

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