Who Pays the HELOC After a Texas Divorce?

In Texas, a HELOC or home equity loan taken out on the marital home during the marriage is community debt, and the lender doesn’t check the divorce decree before it decides who owes what. Your final decree tells you and your ex-spouse who’s supposed to pay it. It says nothing to the bank, which can still come after either spouse who signed the original loan if that second lien goes unpaid.

The Debt Your Decree Can’t Erase

A divorce decree divides property between you and your spouse. It doesn’t rewrite a loan contract. If both of your names are on the HELOC, both of you signed a promise to the lender, and that promise survives the courthouse. Say the decree hands the house and the HELOC balance to your ex. If your ex stops paying, the lender doesn’t call the judge first. It calls whichever name is still on the note, including yours, and reports the missed payment on your credit too.

We’ve watched this catch people off guard more than almost any other piece of a Texas divorce settlement. The house feels handled once the decree is signed and the sign comes down. The second lien is often still sitting there, attached to two names, waiting for someone to deal with it.

If that happens to you, your recourse is against your ex, not the bank. You can go back to court and ask for a judgment against them for the missed payments. Collecting on that judgment is a slower fight on its own, since a lot of Texas property is protected from being seized to pay a debt like that one.

Texas Makes HELOCs Harder to Untangle Than Other States

Texas treats home equity lending differently than almost anywhere else, and it comes from the state constitution, not only loan paperwork. Article XVI, Section 50 of the Texas Constitution requires the written consent of both spouses on a home equity loan or HELOC secured by the homestead, even if only one spouse is on the title. That rule exists to protect the home itself, and it means a lender won’t originate or refinance a Texas home equity loan with only one spouse’s signature, whether the couple is happily married or five months from a final decree.

Texas also allows only one home equity loan against a homestead at a time. That detail matters mid-divorce. You can’t open a second loan to buy out your spouse’s equity or pay off the first HELOC while the original one is still on the property. It has to be paid off or refinanced away first, in the right order, before a new one can go on.

What If the HELOC Got Maxed Out During the Split?

Sometimes one spouse draws down the HELOC hard once a divorce looks likely. A $40,000 draw for “repairs,” a cash advance nobody can explain, a balance that jumps from $12,000 to the credit limit in a matter of weeks. Texas law has a name for this: waste of community property. Spouses owe each other a fiduciary duty over community assets, and a court can offset a spouse’s reckless spending by awarding the other spouse a larger share of what’s left in the estate.

Proving waste takes real documentation: account statements, dates, what the money went toward. It’s a family law question first, so this is where your attorney leads and we back it up with the numbers on the house. But it’s not a fight worth skipping. An equity split should reflect what happened to the debt, not only what’s left on paper the day it gets divided.

Getting the Second Lien Off the House

Before the house sells, refinances, or gets handed to one spouse in a buyout, that HELOC needs an actual plan. In our experience it comes down to one of these:

• Sell the house. The HELOC and the first mortgage both get paid off at closing, straight out of the proceeds, before either spouse sees a dollar.
• Refinance into one spouse’s name. The spouse keeping the house rolls the HELOC balance into a new loan, and the other spouse comes off the mortgage and the lien for good.
• Ask the lender for a release of liability. If the spouse keeping the house qualifies on their own, some lenders will remove the other spouse’s name from an existing HELOC with a divorce decree and a deed, no full refinance required.
• Negotiate a payoff schedule. If neither spouse wants to refinance right away, the decree can require the HELOC to be paid down on a set timeline, with real consequences spelled out if it isn’t.

Peter spent years in construction and mortgage lending before he sold his first house, so when a second lien shows up on a title report mid-divorce, he’s usually already read three of these that month. If the house is more likely to go through a straight buyout instead, our post on assuming the mortgage after a Texas divorce covers what a lender will and won’t let one spouse take over. And if you’re still working out what’s fair on the equity itself once that HELOC balance comes out of it, we broke that down in whether Texas splits home equity 50/50 in a divorce.

Our Houston Divorce Real Estate Guide walks through the rest of what selling the house looks like from here, at your own pace, before you have to talk numbers with anyone.

A HELOC balance is one line in a settlement, and it changes what a fair split even looks like. Get the real payoff number before anyone signs off on how the house gets divided.