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Preventing excessive spending during a divorce

On Behalf of | Jan 25, 2023 | Divorce

When married couples in Texas get divorced, their marital debts are divided along with their marital assets. This is why some spouses who fear losing access to financial assets and credit cards spend excessively before their divorces are finalized. This kind of behavior is especially common in states like Texas with community property laws that require marital assets and debts to be divided equally even when this does not always result in an equitable outcome. However, there are steps that divorcing spouses can take to protect themselves from reckless spending.

Canceling cards or lowering credit limits

Canceling credit cards or lowering credit limits is one way to prevent excessive spending during a divorce, but this may not be possible with joint accounts. When spouses who spend recklessly use their own credit cards or loans, the debts they accumulate may still be subject to division in a divorce if they opened them after they got married. This is because in general only assets owned and debts incurred prior to marriage are considered separate.

Postnuptial agreements

Postnuptial agreements are similar in many ways to prenuptial agreements, but they are signed after rather than before couples get married. Postnuptial agreements can contain provisions that detail how assets and debts should be divided in a divorce, but they cannot be used to establish child custody or support arrangements. These agreements should be negotiated in good faith and agreed to freely and willingly. If they are not, they will likely not be upheld by a judge in the event of a challenge by one of the spouses.

Time is of the essence

The best way to avoid excessive spending during a divorce is to do everything possible to keep the process moving and avoid delays. Divorcing spouses in Texas are required to submit affidavits to the court that disclose their incomes and financial obligations. When the process is brisk and this is done quickly, spouses may be reluctant to spend excessively. They should also inform their family law attorneys promptly when they discover evidence of reckless spending and provide them with copies of recent bank statements and loan and credit card bills.