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April 07, 2025

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On behalf of The Powell Law Firm

| Divorce

What Happens If My Spouse is Bankrupt or has Significant Debt?

Most Americans have debt. The Federal Reserve Bank of New York reports that household debt nationwide is now nearly $20 trillion. Debt can be a big issue in divorce cases in Texas. You need to know your rights if your spouse has a lot of debt, especially if he or she has or will soon file for bankruptcy protection. Here, our Pearland divorce lawyer explains the key things to know about spousal debt—and bankruptcy—in Texas.

Texas is a Community Property State (Including for Debt)

Texas is a community property state. That means that, in general, debts incurred by either spouse during the marriage are considered jointly owned. In other words, both partners are potentially liable. If your spouse accumulates a lot of debt or files for personal bankruptcy, creditors may pursue jointly held assets—including your community property.

The Bottom Line: Your spouse’s debt is a financial risk to you. It is imperative that you have an experienced Pearland, TX divorce attorney on your side.

Texas Property Division: Just and Fair Standard

Texas is a community property state does not guarantee a 50/50 split of the assets (or debts) in a divorce. In a divorce, Texas courts divide marital property and debt based on what is “just and right,” and that is not necessarily an equal split. In other words, the court looks at fairness based on each spouse’s individual financial circumstances. Debt matters. How exactly the debt was acquired always matters. If your spouse has a lot of debt, especially if it was incurred recklessly, selfishly, or secretly, that can absolutely affect how the court splits things. You could be entitled to a greater share of the overall marital property as a result.

Know the Impact of Spouse’s Bankruptcy on Divorce Proceedings

If your spouse files for bankruptcy during your divorce, it can significantly affect the process. Here are some of the most notable points that you need to be aware of:

  • The Automatic Stay: Filing for bankruptcy triggers an automatic stay. That is a matter of federal law. As a result, most collection activities are paused. It can impact divorce proceedings, especially those involving questions over property division.
  • Property Division: In a community property state, all marital property becomes part of the bankruptcy estate. A key point is that the bankruptcy court will not have control over these assets. That can complicate your divorce. ​
  • Debt Responsibility: If your spouse’s bankruptcy discharges joint debts, creditors may still pursue you for repayment. Divorce decrees assigning debt responsibility do not bind creditors. You need to make sure any divorce settlement/order protects you.

Contact Our Pearland, TX Divorce Lawyer for Debt Today

At The Powell Law Firm, our Pearland divorce attorney provides top-tier legal guidance and support to clients. If you have any questions about debt and divorce, we are here to help. Please do not hesitate to give us a call now or to contact us online for a confidential initial consultation. From our Pearland office, we handle family and divorce cases across the entire region.

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