Dealing with separation is challenging. It’s a time filled with emotional turmoil, financial uncertainty and a myriad of legal complexities. One challenging aspect of divorce is the division of assets and debts. What happens when you discover your spouse has been hiding debts?
Understanding hidden debts in divorce
Hidden debts are more common than you might think during divorce proceedings. According to a survey by the National Endowment for Financial Education, over 30% of Americans who have combined their finances with a spouse or partner admit to lying about money, hiding purchases, bills, accounts or cash.
In Texas, a community property state, the court considers most debts incurred during marriage as shared debts, regardless of which spouse incurred them. This may mean that hidden debts could potentially impact your financial situation post-divorce. However, the court may consider several factors when dividing debts, including the nature of the debt, the spending habits of each spouse and whether the debt was incurred for the benefit of the marriage or community estate.
For instance, if your spouse took out a loan without your knowledge and used it for personal expenses rather than for the benefit of the household, the court might treat this debt differently. It’s essential to provide evidence demonstrating that the debt was hidden and not for the household’s benefit.
What to do with hidden debts
If you’ve discovered hidden debts during your divorce proceedings, taking immediate action is necessary. Start by gathering as much evidence as possible about the debt, financial statements, loan documents and any relevant correspondence.
Next, discuss the issue with a professional counsel. They may help you understand your legal rights and options and guide you on how to present the evidence to the court. The court aims to divide assets and debts fairly, but it can only do so if it has all the relevant information.
Continuing ahead
Keep in mind that, while the court divides the debt between spouses, creditors can still pursue either party for joint debts incurred during the marriage. Dealing with hidden debts during a divorce can be a challenging and stressful experience. Consider seeking legal guidance with a background in family law who may provide options tailored to your specific situation. After all, knowledge is power, and in this case, it could mean the difference between a fair settlement and an unfair financial burden.
