Texas Community Property & Spousal Debt

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IN THIS ARTICLE:
  • Texas is one of 10 community property states.
  • Debt created during marriage in Texas is presumed to be community debt.
  • Texas depends on a 4-step test to determine spousal liability for debt.

Learn if You Must Pay Your Spouse's Debts in Texas

Texas is one of 10 community property states. You may have liability for your spouse’s debt even if you knew nothing about it. Texas community property law for spousal debt is tricky, so do not assume you must pay your spouse’s debt automatically. A separate law called the doctrine of necessaries may obligate you to pay your spouse’s debt in Texas. If you are married and reside in Texas, you need to understand if you must pay your spouse’s debt.

This article focuses on a spouse’s debt liability, but there’s much more to Texas’s community property law than this. See Texas Family Code Title, Subtitle B. § 3 and Some Principles of Texas Community Property Law (PDF) to learn how Texas law handles divorce, spousal rights, and credit applications.

Community Property States
Source: Bills.com
Alaska*
Idaho
New Mexico
Texas
* Optional

Community Property at a Glance

In community property states, the presumption is wealth or debt created during the marriage is part of the community property. Therefore, courts in community property states assume a debt incurred from the date of marriage to the date of divorce is a community debt that is to be divided equally between the spouses. (As we learn ahead, Texas has a more complex view of spousal debt.)

Many courts in community property states assume the rents, profits, and issues of separate property remain separate. The fruits of community property are community assets. If a spouse claims that a certain property is separate, it is up to that spouse to prove the property was acquired with separate funds or separate credit. For example, the fact that both spouses sign a mortgage does not mean the property cannot be shown to be acquired with separate funds.

By contrast, separate property is property acquired before marriage, and property acquired by a spouse during marriage through gift, inheritance, or an award for personal injury damages.

Spousal Liability For Debt in Texas

Texas is a community property state. The Texas Constitution states that all property, both real and personal, of a spouse owned or claimed before marriage, and that acquired afterward by gift, devise, or descent, shall be the separate property of that spouse (Tex. Const. art. XVI, §15). All other property acquired during a marriage is presumptively community property, subject to a premarital or marital agreement.

Texas community property falls into two classes:

  • Special community property
  • General community property

Special community property is property under the management of one spouse. General community property is under the joint management of both spouses. Special community property is the term applied to property acquired during a marriage by a couple living in a non-community state, after which the couple later moves to Texas.

In Texas, a debt is either the husband’s responsibility, a wife’s responsibility, or the responsibility of both the husband and the wife together. When it comes to spousal debt, Texas courts depend on a four-step process to determine which assets — community or separate property — are liable for a spouse’s debt.

1. Whose debt is it?

Debts can be the debt of the husband, the wife, or both spouses. A spouse’s separate property, special community property, and joint community property are liable for that spouse’s debt.

2. When was the debt incurred?

Debts incurred before the marriage are tricky to analyze. A spouse’s separate or special community property is not available to the other spouse’s creditors for torts or contracts that arose before marriage. Similarly, a spouse’s separate or special community property is not available for the other spouse’s contracts during marriage — except for "necessaries" (Texas Family Code § 3.202(b)). Special community property is available for the other spouse’s torts (Texas Family Code § 3.202(d)) More on this ahead.

Time-Out For An Example

Before marriage, Texas resident John created $20,000 in credit card debt. After the wedding, John could not pay the debt, and the credit card issuer sued John for breach of contract, and won a judgment against John. The judgment-creditor cannot touch his wife’s separate or special community property. However, Texas law allows the judgment creditor to attach community property.

3. What type of debt is it?

Debts are either tortious (the result of a lawsuit) or contractual. If the liability is a tort debt incurred during the marriage, the other spouse’s special community property is also liable for the debt while the other spouse’s separate property is exempt. If the debt incurred during the marriage is contractual, the other spouse’s separate property and special community property are exempt from the debt unless the other spouse is personally liable under other rules of law.

"Joint-management" community property is subject to all tort or contract liabilities of either spouse, whether the liability arose before or during marriage, which makes it the most vulnerable type of marital property (Texas Family Code § 3.202(c)).

Time-Out For Another Example

During her marriage, Texas resident Karen created $15,000 in credit card debt in an account in her name alone. Karen could not pay the debt, and the credit card issuer sued Karen for breach of contract, and won a judgment against Karen. Her husband's separate property and special community property are exempt. Texas law allows the judgment creditor to come aftercommunity assets and property to collect the debt.

4. Are there any other substantive, nonmarital rules of law that would make one spouse personally liable for the debts of the other spouse?

A spouse is liable for a debt due to:

  • Vicarious liability (the marriage relationship alone is not sufficient to create such liability)
  • Duty to support the other spouse and children for a specified period of time (see the doctrine of necessaries discussion later)
  • Federal income tax liability

If the other spouse is liable because of the applicability of these other rules of law, that spouse’s separate property and special community property are liable for the debt. Essentially, all non-exempt assets of the husband and wife would be available to satisfy the debt.

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Consult with a Texas lawyer who has family law experience to learn more about Texas community property law. If you cannot afford a lawyer, contact Texas Law Help or another Texas pro bono program to find low- and no-cost legal services.

Texas Community Property Law at a Glance
Texas Community Property Law. Source: IRS and Bills.com
Husband or wife liable for debts of other incurred before marriage? Tricky to analyze. See the the discussion "When was the debt incurred" above.
Husband or wife liable for debts of other incurred during marriage? Depends on the nature of the debt. See the discussion "What type of debt is it?" above.
When do spouses become subject to state community property laws? When the spouses are married and domicile in the state.
Does the state recognize common law marriage? Yes. To qualify, spouses must cohabit in Texas, agree to be married and represent that they are married. Parties to a common law marriage must obtain a divorce or annulment to terminate the marriage.
Does the state recognize some from of domestic partnership as an alternative to marriage? No.
Does a domestic partnership under state law create community property rights and obligations? Not applicable.
When does the community property regime terminate (causing subsequently acquired assets or future income to no longer be characterized as community property)? Change of domicile, death, decree of divorce or annulment.
How is post marital income generated from separate property (e.g., rents, dividends, interest) characterized? Community property.
How does the state characterize appreciation in the value of separate property? Separate property. If community property funds are used to acquire or improve the asset, when the marriage is terminated by death or divorce, a claim for economic contributions exists.
How does the state characterize property taken by spouses under a deed reflecting that the property is held in joint tenancy? Depends on source of funds used to acquire property.  Community property remains CP unless a written agreement to partition is first executed.  Otherwise property is CP with a right of survivorship.  Property purchased with separate funds may be held as joint tenants, with undivided 1/2 interest being separate property.
How does the state characterize property taken by spouses under a deed reflecting that the property is held in tenancy in common? Community property, unless a written agreement to partition is executed. Property purchased with separate and community funds is owned as tenants in common.
Does a deed taken in the name of one spouse as sole and separate property create separate property? Only if the deed also contains a recital that the consideration was paid from separate funds of that spouse. If so, the property is then presumed to be separate.
Does the state recognize pre or post marital property characterization agreements? Yes.
What are the property characterization agreements called? Premarital and marital or post nuptial agreements.
Are property characterizations agreements required to be in writing? Agreements must be in writing.
Are property characterization agreements valid against creditors? Yes, unless existing creditor's rights are intended to be defrauded by agreement.
What property is available to satisfy a premarital federal tax obligation assessed against only one spouse? All separate property of liable spouse, 100% of joint management community property, 100% of liable spouse's sole management community property, and 50% of nonliable spouse's sole management community property. If a homestead is involved, contact counsel.
What property is available to satisfy a post marital federal tax obligation assessed against only one spouse? All separate property of liable spouse, 100% of joint management community property, 100% of liable spouse's sole management community property, and 50% of nonliable spouse's sole management community property. If a homestead is involved, contact counsel.
Texas Community Property law:

Texas Doctrine of Necessaries

Texas residents who deal with a spousal debt question must know community property law and the doctrine of necessaries to understand their liability for a spouse’s debt. Texas’s doctrine of necessaries law is not part of community property law, but it may be very important to you.

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Under Texas law, each spouse has a duty to support the other (Texas Family Code § 2.501). If you fail to meet this responsibility, you may be held financially liable to any third party who provides your spouse with food, shelter, or other assistance necessary for daily living (Daggett v. Neiman Marcus Co., 348 S.W.2d 796 (Tex. Civ. App. Houston [1st Dist.] 1961)). This law applies equally to both husband and wife. Texas courts will typically look at the financial situation of a couple to determine what a necessary is. In Texas, necessaries are those things that are suitable to the spouse’s "station in life" (Crooks v. Aero Mayflower Transit Co., 363 S.W.2d 191 (Tex. Civ. App. San Antonio 1963)).

28 Comments
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  • M
    Marrissa,
    Sep, 2020

    We have been denied for a home loan because of our combined high debt-to-credit ratio, but the majority of the debt is my student loans and my husband's credit card from 10 years ago. Is there any way we can get a home based on just the debt incurred since we married 5 yrs ago and leave out the individual debt from long ago?

    • 35x35
      Daniel,
      Sep, 2020

      I understand the student loans being included, as I assume that they remain collectible. I am a bit puzzled by a debt that is past the collections statutes, which you can legally avoid paying, being included in the DTI. Did you ask the lender to clarify? Did you speak to more than one lender? Would you qualify if the credit card debt were not counted and the student loans were? If so, you likely can negotiate a very favorable settlement and wipe out the credit card debt. Be careful how you approach the creditor as there are steps that can restart the clock on a debt, bring it back to life. 

  • R
    Rena,
    Jul, 2020

    My fiancé dropped out of ROTC in college and has a balance due to DFAS. They wanted full payment or a large payment plan that he couldn’t afford. He never made any voluntary payments so his check was garnished up until he changed jobs. For 3 years, they have not garnished his checks but take his tax return every year. We are going to buy a house in my name only with my income only. After we get married, will DFAS have any way to put a lien on the house because of his DFAS debt? At some point he is going to try and do a payment plan but his income is not high enough yet.

    • 35x35
      Daniel,
      Aug, 2020

      Rena, I am not a lawyer and can't give you legal advice. Please do not take anything i share as legal advice.

      You ask an excellent question. Texas is a community property state. If the home were purchased prior to marriage you likely could keep it as a separate asset not part of the marital community's assets.

      I advise you to speak with a lawyer to look into timing and how to structure things properly to achieve your goal of avoiding an encumbrance on your home. 

      As an aside, once married don't file taxes jointly if you are expecting a refund, unless you are OK with it being taken to pay your spouse's debt.

  • L
    Lori,
    Jun, 2020

    If my ex husband gave me our unpaid car as my Separate Community property but it is in his name am I responsible for the loan taking out (he also put in the divorce decree that we would both take care of our own debts that are in our name.

    • 35x35
      Daniel,
      Jul, 2020

      I am not a lawyer and only lawyers can give legal advice. Any information I share is not to be considered legal advice.

      I can't tell from what you wrote if the loan is in his name only. If the loan is in his name, he is on the hook for the debt. Whatever your divorce decree says is not binding on the creditor. A person on the loan doesn't eliminate that responsibility by ceding ownership or by a divorce decree transfering responsibility to the other spouse. That could create a responsibility between the spouses that the family court could act upon if the terms of the decree are violated.

      I don't know how your divorce was handled. Did you have a lawyer? If so, touch base with him or her. Review the facts of the matter and discuss if you want to keep using the car, can afford to make payments, and who will be the owner once the vehicle is paid off? 

  • E
    EB,
    May, 2020

    My husband owes child support in Florida we married 2 years ago. I bought a house in my name only recently in Texas. Will my home be somehow taken?

    • 35x35
      Daniel,
      Jul, 2020

      EB, Texas is a Community Property state so the asset could be considered his, too. I beleive the worst-csase scenario would be a lien on the home. Because Texas allows for your homestead to have an unlimited dollar exemption, they may not even be allowed to take any collection efforts.

  • A
    Angela,
    May, 2020

    Hello, My ex-husband and I are long-term Texas residents, were married 7 years, no children. Prior to our marriage, X was recruited by a Financial firm that paid him a bonus of 2-3MM, I received no benefit. After our divorce was final, I discovered he used 1MM+ of community property assets to repay that personal debt in addition to debts from margin accts to purchase stock he transferred to private accounts-mutiple sketchy activities. I most recently discovered notes from our mediation-”X moving business Large Bonus” (3-5MM). He also charged 50-60k per month on credit cards paying off balance monthly, and a multitude of equally sketchy activities. Our date of divorce is under 2 years. Do I have any recourse on his use of community property funds for paying off incredulous debt that he benefited from? It is important to note he hired an attorney to put together a divorce plan several months prior to him leaving, giving him an advantage to prepare. Textbook case, I did not see it coming. I was given notice at 9:39pm movers came 7:3o am next day, 2 business days later he filed. I quit my job as a sales mgr with a Fortune 500 Firm 5 years prior to help him build his practice, and as he sold it, supervise building the pool and travel with him. Production grew to 400k to 850k. He is now earning 1MM+. I’m 54 and still unemployed. I understand you aren’t giving legal advise, I’ve spent 200k on attorney fees and I’m tapped out. You also make sense. I appreciate your time. A.

    • 35x35
      Daniel,
      Jul, 2020

      Angela, I apologize that your question fell into the cracks and did not get the rapid reply it deserved. Thank you for your kind words and for acknowledging that whatever I share is not legal advice.

      It seems the key is to show your ex demonstrated bad faith in his disclosure to the court, willfully leaving out facts that would reasonably cause you to ask for more and which the court would have weighed when ruling on the division of property. I really can't think of a way to undo this that doesn't involve contesting it in court and more lawyers. 

      Operating under the theory that part of a pie is better than none at all, do you think you can present what you now know to a lawyer and convince him or her that you hold a winning hand? If so, perhaps you can offer a generous percentage as a fee, if they win, and a nominal or no fee if not. 

      My email is dcohen@bills.com, if you want to discuss this or brainstorm about other possible strategies.

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