11 Jun How are Debts Handled in Divorce?
Debts & Divorce
When it comes to divorce, Florida is an equitable distribution state. This means that all marital assets and liabilities are distributed in a manner considered to be fair. This does not mean an equal distribution. The parties can agree between themselves how the assets and debts are to be divided. If they cannot agree, there are many factors the family law court will consider in determining which party gets which assets and how the debts will be divided.
Equitable assignment of debt
Marital debts are those that were incurred during the course of the marriage. In some cases, debt that was incurred prior to the marriage by one party becomes marital debt if the other party in some way ratified that debt. One example of that would be if payments on a premarital debt were made from a joint bank account opened after the marriage. After all marital debts and assets are identified, the court looks at many factors in order to determine a fair distribution. Some allocation of certain assets may be offset by the courts distribution of debt. Some of the general factors a court considers in dividing the assets include:
- The length of the marriage.
- Contributions each party made to the accumulation of assets.
- Whether one party gave up educational and career opportunities in order to further the career of the other party.
- The economic situation of each party including each person’s ability to be employed or earn money after the divorce is final.
The court then considers how the debt should be divided. Although the court begins with the premise that there should be an equal distribution of debt, some other factors come into play, such as:
- The responsibility of each party in accumulating debt.
- The reckless incurring of debt by one party.
- Any intentional wasting of assets during the two years prior to the divorce petition.
- Misconduct of a spouse, such as spending marital assets on an affair.
- Any debt that appears to be a marital debt that was incurred by one party forging the name of the other on the loan documents.
- The law allows the court to consider any other factor that is relevant in order “to do equity and justice between the parties.”
Assignment of payment responsibility
When the court orders the division of debt, it specifically designates which party is responsible for each debt. This court order is valid and binding upon the parties, but it is vitally important for the party who is relieved by the court from paying the debt to contact the debtor to be sure their name is removed from the account. It is possible the order is not binding on the debtor and the party who was relieved from the court for paying the debt may still be contacted by the debtor if that party’s name is still on the account.
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