Dividing Debt in your Divorce
In any divorce, the couple’s marital assets must be divided between them. For couples with relatively small marital estates and prenuptial agreements in place stating exactly how their assets are to be divided, this is a fairly straightforward process. For other couples, it can be fairly complicated.
Marital debt, too, must be divided between the divorcing parties. This is the debt that the couple accrued jointly during their marriage, such as balances on their joint credit cards and outstanding car payments for vehicles they own. It does not include debts held before entering the marriage and debts the individuals took on themselves, which can be the case when one spouse has a credit card solely in his or her name and carries a balance on the card.
Marital Debts are Distributed According to the Same Principals as your Assets
In Florida, marital assets are divided according to the doctrine of equitable distribution. Applying this doctrine means that a couple will not necessarily receive equal shares of their marital assets, but that each will receive an appropriate share of the assets based on his or her financial and personal needs following the divorce.
Marital debts are distributed the same way. The court considers a variety of factors about the couple, such as each partner’s earning capacity after the divorce and how the debt benefited them during their marriage. For example, although a student loan might have been taken out to help one partner further his or her career, that loan ultimately benefited the couple and their family as a whole by covering living expenses while the partner pursued his or her degree and by increasing his or her career prospects and income after graduating.
When Possible, it is Best to Eliminate Debt Before your Divorce
Getting divorced is expensive. It is not uncommon for a divorce to leave both parties in more debt than they were in when they initially filed for divorce. One way a couple can avoid this problem is to take steps to pay down their debt before they file for divorce. When the couple is facing so much debt that they realistically cannot repay it without help, they may file for bankruptcy jointly and then file for divorce once their bankruptcy case is complete.
Another strategy that couples employ, sometimes on its own and sometimes after paying down as much debt as they can, is to divide their debt themselves. Joint credit card debt can be transferred to new, separate cards, eliminating the need for the court to divide this debt for the couple.
Work with Draper Law Office to Complete your Divorce
Before you start working through your divorce, take the time to speak with an experienced divorce lawyer about each of the process’ steps, including the distribution of your marital debts and assets. Contact our team at Draper Law Office today at 866-767-4711 or by visiting our firm online to schedule your initial consultation in one of our two convenient locations: Kissimmee, and Orlando.