When you hear about divorce battles, it is often about a power struggle over the couple’s marital assets. Who will get the home? Who will get the vacation home? Who will get the cars? Who will get the stocks and other financial assets? Well, while these are important questions that can cause a divorce to quickly become hotly contested, there are other important questions that relate to things other than the division of the couple’s assets. For instance, what happens to the marital debt? Debt can have a huge impact on the financial well-being of former spouses after divorce. It is part of the division of the marital property equation and should be approached thoughtfully and carefully.
What to Know About Debt Before You Divorce
Over the years, spouses usually acquire assets. It is also common, however, for couples to take on debt over the years as well. Credit cards, personal loans, mortgages, and more can add up quickly. In fact, most divorces will raise complex issues regarding marital debt. If the divorcing spouses cannot reach an agreement as to how the marital debt is to be divided, the court will step in to decide on this issue.
To divide marital assets and debt, Florida courts follow the rule of equitable division. Equitable division means the marital assets and debts should be divided in a manner that is fair, when a number of factors are considered, as opposed to equal. The court will consider things such as each spouse’s contributions to the marriage as well as each spouse’s earning capacity. The length of the marriage as well as whether a prenuptial or postnuptial agreement is placed will also be considered. In the event that a prenuptial or postnuptial agreement was executed, there may very well be a provision that dictates how all or some of the couple’s property is to be divided in the event of divorce. There may also be a provision directing what should be considered marital property as well as what should be considered separate property.
Before debt can be equitably divided in a divorce, it must be determined what debt is categorized as separate and what debt is categorized as marital. Marital debt, generally speaking, refers to that debt incurred by spouses or a spouse during the marriage. Alternatively, separate debt, or non-marital debt, is generally considered to be debt that was acquired prior to the marriage and can also include certain debts incurred during the marriage as well as any debt that the spouses have defined in a valid written agreement, such as a prenuptial or postnuptial agreement.
Prior to divorce proceedings, it can be critical for spouses to have a solid understanding of their outstanding debt obligations. Furthermore, both spouses should fully disclose all assets and debts. If you have any concerns about your spouse hiding assets, talk to your attorney about this. Uncovering hidden assets can be critical in helping to determine an equitable division of both marital assets and debts.
It should also be made clear that, while the court will divide marital debts, creditors will not be bound by such a court order. This means that if your spouse is directed to be responsible for making payments on a marital debt and should fail to do so, the other spouse can still be held liable for creditor claims for failure to pay on that debt. This is why it is often the best course of action to pay off as much, if not all, marital debt as possible prior to divorce.
Florida Family Law Attorneys
Divorce can be overwhelming. Your life can feel like it is being turned upside down. Do not make the mistake of taking your eye off of the potential financial impacts divorce can have on you. Talk to the trusted family law team at Orlando Family Team about how to protect yourself and your best interests in a divorce. Contact us today.