Debt in Divorce, Debt Relief

How Debt is Handled in Divorce

In a divorce, the married parties end up dividing assets accumulated during their marriage. Most people going through a divorce worry about dividing up their property and other assets. However, dividing up debt is just as important- if not more. This is of particular importance if the spouses do not have many assets.

A divorce judgment is where the court divides up the couple’s assets, as well as their debts. Part of this order involves determining which spouse is responsible for which debts. Normally, debts are divided equally between the parties, but that is not always the case when one spouse earns significantly more than the other or where one spouse is receiving more property that has debt connected to it than the other spouse.

The State of Florida divides property and debts in a marriage according to the legal theory of equitable distribution. Equitable distribution is a principle in divorce law governing the allocation of marital property between spouses. Rather than require the division be precisely equal, Florida courts look more towards whether the division is fair or equitable depending on the circumstances of the parties.

Several different types of debt are affected by a divorce order, including credit card debt, mortgage debt, student loans, medical debt, and auto loan debt. For the most part, any debt that either spouse brought into the marriage or was incurred prior to getting married, is assigned to that specific spouse. The debts that are split between the parties in the divorce order deal more with joint debt or debt that was incurred during the marriage.

When it comes to mortgage debt, this debt normally is assigned to whichever spouse assumes ownership of the house. If the parties agree to sell the house and split the money, whatever is left after the mortgage is paid off in full, that can be part of the court’s order, as well. The same rule applies to auto loan debt. If one spouse wants a specific vehicle, he or she usually takes on the debt that is connected to that car.

When it comes to the division of all other debt, the court will look to a number of different factors before allocating responsibility for the debts. These considerations include the behavior of each spouse during the marriage, the income earning potential for each spouse, and who incurred the debt and how it was incurred. For example, if one spouse spent more during the marriage with reckless spending habits using credit cards without the other spouse’s knowledge or consent, the court will likely assign responsibility for that debt to that spouse.

A word of caution should be issued in the event a specific debt is assigned to one spouse in the divorce order and that spouse does not hold up his or her obligation by paying on the debt. While a divorce order may assign responsibility for a debt, a creditor is not under any obligation to follow that order. If both spouses’ names were on the debt, even if it was assigned to the husband, if he does not pay on the debt, the creditor could legally go after the wife for payment. At that point, the wife would need to pursue legal remedies in family court to enforce the order and force the husband to pay the debt he was assigned. This consideration should be kept in mind when parties are negotiating who will pay off which debts.

Please click here to read more.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.