Think Twice before Becoming Your Spouse’s Lender

There isn’t always an easy answer on how to divide up the assets you share with your spouse in a divorce. Some items may not hold a great deal of market value but have sentimental significance to both spouses, resulting in a fight over who gets to keep them. Larger items can be even more difficult to split fairly. One spouse may be interested in becoming the sole owner of a high-value marital asset, such as a home or retirement account, but may lack the funds to buy out the other spouse at the time of the divorce.

The spouse who seeks to retain the asset may ask to pay their spouse’s share in installments if cash is unavailable. But is an installment agreement a good idea, if you’re the spouse who will be acting as creditor? Consider the possible downsides before entering an agreement to accept installment payments from an ex, and contact a knowledgeable Texas divorce attorney with any additional questions.

Would you struggle financially if your ex missed a payment, or stopped making payments entirely?

While it’s admirable to lend someone a helping hand, be careful that you’re not agreeing to an installment plan solely out of guilt or as a result of pressure from your ex. If you would be financially dependent on getting a payment from your ex each month, or would struggle as a result of not getting the share you’d be owed if you liquidated the high-value asset, then an installment plan might not be in your best interests.

Will acting as creditor interfere with your financial activities?

If you are allowing your spouse to keep the home and pay your share to you in installments, it may seem wise to remain on the mortgage and protect your equity interest until the liability is paid off. But then you may have difficulty purchasing a new home of your own, because the existing liability may scare off your potential lenders. It’s important to think about the ways serving as your ex’s creditor could limit you.

Are you prepared to return to court if your ex fails to hold up their end of the bargain?

It is an absolute must that you put any installment payment plan into writing, and that you have the contract drafted by a skilled attorney who will make sure it’s enforceable in court. That said, the necessary implication of signing a contract is that, if the other signatory doesn’t perform as promised, you can turn to the court for an order forcing them to comply. If you’ve already gone through a long, contentious courtroom battle prior to this point, you may not have any interest in coming before a judge yet again. Rather than invite this sort of conflict back into your life (and possibly that of your children), find out whether your spouse might get the funds to buy out your share from some other source, such as a parent or friend.

If you need sophisticated, compassionate, and effective legal help for a Texas divorce, contact the seasoned and knowledgeable Houston family law attorney Maria Lowry at 713-850-8859.