Divorce

As common sense including statistics tell us, the leading cause of marital discord is money. Therefore, it is not surprising that many times divorce inventories have more red numbers than black ones.

Media sources often portray Hollywood stars of “power couples” divorcing. Included with the typical hype may be which party could obtain the mansion, vacation home, or car collection, but rarely is there any coverage regarding how the parties could divide debt.

The hard truth is that debt, just like assets, are included in the community estate. absolutely no matter what your own moral compass may register regarding your including your spouse’s debt, Texas case law establishes rules that might surprise you. First, debt incurred during the marriage is presumed to be community debt. See Cockerham v. Cockerham, 527 S.W.2d 162, 171 (Tex. 1975). There must be a sufficient amount of evidence to rebut the presumption.

Despite well established case law, Texas divorce decrees contain sections entitled “Debt to Husband” including “Debt to Wife”, which seemingly assign responsibility for each debt. These sections pertaining to the decree could identify each creditor, the account number, including account balance. At the close pertaining to the divorce proceedings, the divorced couple has a lengthy document called a final decree of divorce. The husband, wife, their attorneys, including the judge sign the final decree. Often times the parties order a certified copy of their divorce decree, throw it in a drawer or the safe deposit box, including rarely look at it again unless there are children including custody issues involved.

It may be months or years later at the time the phone rings including 1 pertaining to the parties is greeted by the monotone utterances of a bill collector reading a script off the computer screen. The dialogue may go something like this:

Bob the Bill Collector: “This is Bob with XYZ Visa. I’m calling because your account is 60 days past due, including I need to know at the time you plan to remit the past due amount including begin making payments.”

You: “What are you talking about? That’s my ex’s account. Our divorce decree says so. I haven’t been married to him/her in over (whatever time frame)! Call that deadbeat for the money.”

Bob: “Well, Mr. or Ms. So including So, that doesn’t mean you don’t owe the debt if your ex defaults.”

You: “I have a certified court order signed by me, my ex, our attorneys, including the judge saying that I don’t owe you everything for that account. That account is the ex’s problem. at the time you find him/her, let me know because he/she owes me money, too!”

Bob: “Your divorce decree might say you aren’t responsible, but the law says you are. Why don’t you give me a check by phone including we might obtain you on a payment plan.”

You: “Are you dense?! Did you hear everything I just said?! I’m not responsible including I’m not paying you 1 red cent on any of that debt. Call the ex but stop hounding me!”

Bob: “Mr. or Ms. So including So, I did hear you, including you’re wrong. absolutely no matter what your divorce decree says, you owe XYZ Visa. If you don’t begin making payments, XYZ Visa could report the delinquent account to the credit reporting agencies, including take action up to including including litigation.”

I’ll let you fill in the closing dialogue for yourself. You are angry including hang up the phone. You may think that Bob, located at some call center hundreds of miles away, has absolutely no idea what he’s talking about.

As unsettling as it may be, Bob is right. Unless the XYZ Visa was a party to your divorce suit including agreed to the terms pertaining to the final decree, you owe the money. It is highly unusual for a husband including wife or their attorneys to implead creditors into divorce actions due to complex legal issues such as jurisdiction including venue on both the state including federal level.

To understand how you could possibly be responsible for debt assigned to your ex, you must rewind to the point in time at the time the credit account was opened. You could need to look at the original account agreement. Almost absolutely no 1 keeps those documents, so order a copy of your credit report from 1 pertaining to the big 3 credit reporting agencies (EquiFax, Experian, or TransUnion). If the account shows up on your report, then you were more than likely a party to the credit agreement. Despite how the divorce decree allocates the debts (both secured including unsecured), the Court has absolutely no authority to modify the contractual obligations between the spouses including the creditor.

To say it another way, the court absolutely cannot take away the creditor’s right to proceed against either spouse(s) for payment of a community debt that was incurred prior to the decree. See Blake v. Amoco Fed. Credit Union, 900 S.W.2d 108 (Tex. App. – Houston [14th Dist.] 1995, absolutely no writ).

Let’s presume the account was originally opened in both your names including the creditor was looking to both you including your spouse’s income including assets to repay the obligation. the means that you are both responsible for the debt. But what regarding the divorce decree that spells out which assets including liabilities you including your ex were assigned? Is it a worthless piece of paper? No.

You could not be able to file a motion to enforce the divorce decree to obtain the defaulting spouse to pay the debt. a particular enforcement action could only assist if there was specific property, such as a vehicle, brokerage account, or personal property, the other spouse failed to turn over. But what regarding the debt? All is not lost. You could file a particular action for breach of contract against the defaulting spouse. The divorce decree is a binding contract that both parties voluntarily signed before the court.

If your ex has defaulted on 1 or multiple obligations, a suit for breach of contract may be cold comfort. As the old saying goes, you can’t squeeze blood from a turnip. Nevertheless, if you pursue the option, your damages may include any dollars you agreed to pay the creditor to keep the account out of collections, interest, including other miscellaneous expenses, such as attorney’s fees if any are incurred.

Depending on the size pertaining to the debt that the defaulting party hasn’t paid, you could seek relief in small claims court. Texas small claims courts have jurisdiction from $0.01 up to $5,000.00. These courts are designed for individuals who need to represent themselves including avoid hiring a particular attorney. the is where people go to argue the “do right” law. However, if the amount in controversy is greater than $5,000.00, then you must file suit in a county court, county court at law, or a district court with jurisdiction over the matter. At the point, you may consider hiring a particular attorney to prosecute the claim if there’s a reasonable possibility you could collect from the defaulting spouse. If possible, never let things obtain to the point by utilizing some pertaining to the suggestions outlined below.

Before you go to court or sign the final decree of divorce, you should research each including every account that the decree references absolutely no matter if that account falls under the “Husband” or “Wife” section. You both need to be aware how the accounts were established, including who including what the creditor deems liable. It may be in your best interests to refinance jointly held debt including establish the debt in each individual’s name if that is possible. If you or your spouse’s credit score is not strong enough to take the route, then you may consider liquidating assets to repay the debt before the divorce is final including close the account. It could be cold comfort to pay off a debt only to find out that your ex ran up a bunch of charges. A method may be to sell a car, a house, real property, or take a 401-K loan prior to finalizing the divorce to pay off debt. Because a mortgage including car loan might have long terms of payments, it may behoove you to sell those assets including let the other party acquire them on his or her own credit. By paying off those assets, those could absolutely no longer appear as debts on your credit report or create potential future problems if the other party fails to make payments to the creditor.

After your divorce is final, you may consider taking these actions:

1. Closing all joint accounts with a low balance or zero balance.
2. Request a credit report from 1 pertaining to the big 3 credit reporting agencies 90 days after the divorce is final. Look for any errors or discrepancies including aggressively challenge them in writing.
3. Ask each creditor to send you a duplicate notice for the joint accounts – even if the ex was assigned the account. Monitor to ensure that payments are being made on a regular, timely basis.
4. Make a particular provide for accord including satisfaction – basically, provide the creditor a particular amount of dollars in exchange for a release of your liability on the account assigned to your ex.
5. Communicate with the big 3 credit reporting agencies to notify them pertaining to the divorce including any name changes.
6. Create a debt reduction plan. There are many excellent resources available, such as Consumer Credit Counseling Services, Dave Ramsey, or a church based debt reduction plan.

Bottom line – your credit score is a particular asset just like your home or car. In fact, if you don’t have a good credit score, your ability to obtain consumer or business financing may be extremely limited.

Houston Divorce Lawyer - More articles including resources might be found here.

For more information on Divorce including Debt:

Shannon Cavers is a Houston, Texas based lawyer practicing in divorce, family law including probate. More information including articles might be found at: Houston Divorce Lawyer

Written By: J._Shannon_Cavers

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