Many couples talk about splitting assets before marriage, but conversations about debt are just as important. Debt can create serious conflict later if it’s not addressed early.
In the video, Atty. Tyler Monahan of Turner-Monahan PLLC talks about how debt can be handled in a prenup and why it matters for couples planning ahead. All case evaluations are based on Texas Family Law. This content is for educational purposes only.
Can Debt Be Part of a Prenup?
Premarital agreements are not just about protecting assets. They can and should also include debt. At Turner Monahan, we help couples use these agreements to bring clarity not only to what each person owns but also to what each person owes.
Can Debt Be Separated Ahead of Time?
Yes. Debts like student loans, credit card balances, or personal loans can be included in a premarital agreement. You can decide in advance whose debts will stay separate and what type of debt might become shared in the future.
When you enter a marriage, you may already have debt. A premarital agreement allows you to clearly list and confirm what debts you each have at that point. This way, both parties know which debts remain separate and what happens to any future debt.
How Debt Is Treated During the Marriage
Once you are married, it is important to understand how new debts are handled. If a debt is taken out in one person’s name, it is considered their debt. That is true even if both people intended to use the money for something together.
A premarital or postmarital agreement can make that even clearer. It can be stated that any debt taken out by one spouse stays with that person, no matter what it was used for. This avoids confusion and disagreement later. It also protects each person’s financial future by setting expectations upfront.
At Turner Monahan, we work with couples to prepare fair, thorough agreements that cover both assets and debts, giving both parties peace of mind.
What Happens if Debt Grows During the Marriage?
Some debts may start small but grow during the marriage, like a personal loan that increases with interest or a line of credit that keeps getting used. A good prenup can cover these situations by saying who is responsible for increases in debt over time. If this is not clearly written in the agreement, the growing debt could become a shared issue later, even if only one person took it out.
What if One Spouse Pays Off the Other’s Debt?
It’s common for one spouse to help pay off the other’s debt. But if the agreement doesn’t say how that is handled, it can lead to frustration. For example, someone may expect to be reimbursed if they use their own money to pay off a spouse’s student loans. A prenup or postnup can include terms about whether these payments are considered a gift, a loan, or if there will be compensation in the event of divorce.
Does Co-Signing Create Shared Debt?
When one partner co-signs a loan for the other, it becomes a shared financial obligation, no matter what the agreement says. This can lead to serious consequences if the primary borrower stops making payments. Even if the premarital agreement says debt is separate, a lender will still go after the co-signer. That’s why it’s important to discuss co-signing in advance and clarify what both people are comfortable with.
What Does the Texas Family Code Say About Debt and Marital Agreements?
The Texas Family Code allows couples to contract around many financial matters in a valid premarital or postmarital agreement. Here are a few key statutes that matter when it comes to debt:
Texas Family Code Section 4.003
This section outlines what can be included in a premarital agreement. It allows parties to agree on rights and obligations regarding income, property, and debts, both existing and future. As long as the agreement is written and signed voluntarily, it is enforceable.
Texas Family Code Section 3.202
This covers liability for debts. It explains that a person is generally not responsible for their spouse’s separate debts unless they have agreed to be. A valid agreement can reinforce this rule and make sure both parties understand what they’re each responsible for.
Texas Family Code Section 4.006
This section talks about enforceability. It says that an agreement will not be enforced if a party didn’t sign it voluntarily or didn’t receive fair disclosure of the other person’s financial situation. This is especially important when discussing debt because hidden liabilities could cause legal issues later.
Texas Family Code Section 3.301
This section refers to the right of reimbursement. It’s relevant when one spouse uses separate property or funds to pay community debt. A prenup can waive or define reimbursement rights, helping avoid confusion if one person ends up covering shared or separate debts.
Hire An Experienced Fort Worth, Texas, Divorce Attorney
Debt can cause real problems in a marriage if not handled clearly from the start. A detailed premarital or postmarital agreement can prevent misunderstandings and protect both spouses. To make sure your agreement follows Texas law and fully protects your interests, it is best to speak with an experienced family law attorney.
Schedule a free, no-obligation consultation with Attorney Tyler Monahan to discuss the details.
Check our website for more information about our services. Plus, don’t forget to go through our blog to find out more about your case. There is tons of information on divorce and answers to unique questions like “How Do I Prepare for Court?”
FAQs Regarding Divorce
Divorce cases are unique, so you will have many questions. To save you time and hassle, here are some topics that revolve around the area. For more information, contact our firm, Turner-Monahan, PLLC.
Disclaimer
The commentary and opinions are for informational and educational purposes only and are not intended to provide legal advice. You should contact an attorney in your state for legal advice concerning any particular issue or problem. You can become a client and enter the attorney-client privilege only after hiring Turner-Monahan, PLLC, by signing a written retainer agreement.
