How is Debt Divided in a Divorce?

Divorce is a difficult and complex issue, full of emotional and financial pain that cannot be avoided until the divorce is complete and the property divided.  Throughout the divorce process decisions have to be made to ensure that both partners receive the appropriate amount of money and property from the settlement and are required to pay off the appropriate amount of debt.  In Florida one of the key elements in determining these issues is the application of Florida’s equitable distribution statute. 

Florida Law Regarding Divorce Settlement

Florida is an equitable distribution state.  That means the Court starts with the assumption that all marital assets are owned 50% by each spouse.  There are also non-marital assets which are assets specifically purchased by monies belonging to one of the parties either pre-dating the marriage or from a source unconnected with the marriage such as an inheritance.  The Court attempts to fashion a fair settlement with the idea in mind that neither party passes from prosperity to misfortune or misfortune to prosperity. 

In addition to equitable distribution of marital assets, the Court may consider the applicability of one or more types of alimony.  In Florida the following types of alimony are available:  lump sum alimony, permanent alimony, temporary alimony, rehabilitative alimony, and breach the gap alimony.

Lump sum alimony is award of property or money in bulk.  Permanent alimony is alimony that normally is paid by one spouse to another spouse for the balance of that spouses lifetime assuming the payor spouse continues to live.  It is normally terminated by re-marriage or co-habitation with another individual in a supportive relationship.

Temporary alimony is alimony that is granted during the pendency of the divorce to ensure that each spouse has sufficient funds with which to survive on.  Rehabilitative alimony is alimony that is paid by one spouse to another during the period of time where for example one spouse continues to complete school towards a degree that both parties agree would lead to self-sufficiency.  Bridge the gap alimony is alimony that is given to one spouse until such time as there is self-sufficiency.

In Florida, before you can go to trial in a divorce or dissolution of marriage case, you must do mandatory financial disclosure where each party gives the other party proof of all assets and liabilities. Prior to going to trial you must go to Mediation where you have a chance along with your attorneys and a Professional Mediator to resolve all issues of your case. 

Settling Debts

If there are debts still owed by the couple at the time of divorce, determining who is responsible for those debts is part of the divorce settlement.  If those debts are greater than the assets, the parties may be assigned to pay the various debts that remain.  That may mean one partner pays the Visa bill and the other partner pays the Mastercard bill, etc.  If a debt is in both names and the one assigned to pay the debt fails to do so the other partner may be held responsible by the creditor.  In that case that partner may be able to sue the one charge with paying the debt for that compensation.

Sometimes a spouse files for Bankruptcy as to a joint debt and leaves the other spouse responsible for the debt.  This does not bar the paying spouse from suing the non-paying spouse for the bill that they were suppose to pay under the divorce settlement.

Items Which Determine Marital Property vs. Non-Marital Property

Marital property normally consists of all monies earned during the marriage and all the personal and real property acquired with those monies and all debts incurred during the marriage for marital items unless they clearly secured by the separate property of one of the parties.  Non-Marital property in a divorce usually includes inheritance and gifts received by just one partner and not co-mingled into joint accounts with the other partner.  The Court awards pension proceeds assigned to one spouse and property that was purchased with owed separately by one spouse which pre-date the marriage or a business owed by one spouse that remains in the name of that spouse that is primarily operated by them. 

Conclusion

Debts are just one part of the marriage property and monies that must be divided appropriately between the parties in a divorce.  It can be a challenge to determine how to divide the elements of a long term relationship.  However it is usually easier to live with a decision made jointly at Mediation than be required to abide by resolutions handed down by an impartial judge who only shares a brief moment of time with the parties.