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Can I protect myself from debt collection with a prenuptial agreement?

On Behalf of | Nov 1, 2021 | Divorce, Prenuptial Agreements |

A prenuptial agreement is useful for many situations. It can allow you to protect an inheritance or family money. It can allow you to safeguard against high alimony awards, and it can set expectations for your marriage.

Some people may try to use a prenuptial agreement to offset the debts they have. The common tactic is putting separate property into the marital estate. According to the Texas Constitution and Statutes, creditors retain rights to property even if it becomes community property.

An example

If, for example, you own a vehicle and you are late on the loan payment, you cannot use a prenuptial agreement to make that vehicle community property to avoid the debt. Your lender can still repossess the vehicle if you fail to honor your loan agreement.

Real property

With real estate, converting to community property also will not change the legal obligations regarding a mortgage. You can add your spouse’s name to the deed, but it will not change the rights of the mortgage lender.

About debt

It is important to note that the debt you bring into the marriage will become community property unless it remains separate. When this happens, you and your spouse take on the responsibility for paying the debt or dealing with any results of not paying the debt. Transferring debt to community property does not give you the ability to protect the assets under the claim that your spouse has ownership and is not the one who created the original debt.

Prenuptial agreements apply only to your marriage and related finances. Agreements with outside parties do not change because you create an agreement with a future spouse.