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Seeking repayment of marriage loans in a divorce

On Behalf of | May 23, 2018 | Divorce |

Married couples share their happiness and sorrow along with their assets and debts. During divorce, however, a spouse who paid their soon-to-be former spouse’s debt may not get that money back.

Texas is a community property state where a spouse may leave the marriage with any assets that they brought into the marriage, such as a house. There is one major exception. Property, or debt, that is commingled may become community property that is divided among the spouses.

A spouse who had debt before their marriage still has the sole responsibility of paying it off. But a spouse who pays off even a major debt for their spouse while married, such as college loans, cannot retrieve money spent to retire this large debt.

Courts must fairly and reasonably divide assets and debts. A spouse should document all their transactions with their soon-to-be former partner. They should close joint accounts and monitor credit accounts to assure that their spouse is not secretly running up debt that could become both spouse’s liability even after they end their marriage.

Information should be located concerning retirement plans and pensions. Obtaining forensic accounting review of these plans, existing before and during marriage, may be helpful.

Courts usually divide these retirement accounts equally. Where a spouse paid off their former spouse’s college loan or other substantial debt, however, a court may show flexibility and consider debt payment while dividing these plans.

Texas judges must also address other important financial matters. Courts do not order a party to pay spousal support unless they were married for at least 10 years. There are some exceptions. These include the involvement of a minor child, a spouse with a disability or if there was domestic abuse.

Being prepared and knowledgeable about these financial issues is important for determining whether mediation is a reasonable option and can help prepare a spouse for settlement negotiations or litigation. Property division in Texas can be a complicated issue, so both spouses should understand how the law will apply to the facts of their unique situation before proceeding.

Source: MarketWatch, “I paid off my wife’s student loans-then she filed for divorce after two years of marriage,” Quentin Fottrell, April 21, 2018