Handling Debts in Florida Divorces
Navigating through a divorce can be a tumultuous journey, especially when it comes to the division of debts. In Florida, as in many states, the law requires an equitable distribution of marital debts, but this doesn’t always mean a 50/50 split. Just as assets gained during a marriage are usually considered joint property, so too are debts and loans – no matter who took them on. High-income earners, in particular, may face complex financial scenarios that can significantly impact their post-divorce financial health.
If you are a Florida resident contemplating a divorce, understanding how debts are handled can be crucial to protecting your financial future. A seasoned divorce attorney helps ensure your rights are safeguarded from start to finish. Reach out to The Bardine Law Firm today to discuss your situation with an experienced attorney and learn how we can assist you in navigating the complexities of debt division in a Florida divorce. You can contact Johnny at (727) 605-7078 or through our website.
Equitable Distribution of Assets and Debts in Florida
In Florida, the division of marital property and debts during a divorce is governed by the principle of “equitable distribution.” Contrary to common belief, this concept does not automatically imply a 50/50 split. Instead, it aims to ensure a fair and just division of assets and liabilities, taking into account the unique circumstances of each case.
Under equitable distribution, assets and debts are considered marital property, assuming spouses acquired them during the marriage. Anything can fall under this category, from real estate and retirement accounts to credit card debts and loans.
Assets or debts that originate before the marriage are not usually considered marital property, and other sources of income, like inheritance, may also be excluded. These assets and debts are considered ‘personal’ and remain in the same person’s name before, during, and after marriage.
The court considers several factors when determining how to distribute marital debts and assets equitably. In non-combative divorces, attorneys use these same factors as a baseline to create an agreement satisfactory to both parties. These factors include, but are not limited to:
- The duration of the marriage
- The economic circumstances of each spouse
- The contribution to the marriage by each spouse, including opportunities that one spouse gave up
- The contribution of each spouse to the debts
- The behaviors of each spouse, such as whether or not they ran up debts in preparation for a divorce
Understandably, the considerations that go into splitting assets are not always the same as those for dividing debts. Additionally, a divorce agreement does not change the underlying debt or loan contracts, which usually have a single name on the papers. Divorce agreements have to take into account the most effective way for the party who signed for the loan to pay off the debts without accruing interest or penalties.
Which Debts Are Which?
- Student Loans: If acquired before marriage, student loans are typically considered personal debt. However, if the loans were taken out during the marriage, they may be considered marital debt – no matter who the loan is for.
- Credit Cards: Credit card debt can be either personal or marital, depending on when it was incurred and what it was used for. If a credit card was used to benefit the marriage or family, the debt is likely to be considered marital. However, you may be able to prove that certain credit card purchases did not go toward the benefit of the family as a whole.
- Mortgages: Mortgages on a marital home or other jointly owned real estate are generally considered marital debt, even if one spouse took the reins on the loan. Personal mortgages may become marital if, over time, they become the established, long-term residence of the other spouse.
- Personal Loans: Personal loans taken out before the marriage remain the responsibility of the individual who incurred them. However, loans taken out during the marriage for the benefit of the marital household are typically considered marital debt, similar to student loans.
- Car Loans: If a car was purchased and used for the family’s benefit, the associated loan is usually considered marital debt. If the vehicle was purchased before the marriage or used exclusively by one spouse, the debt may be considered personal.
Contact A St. Petersburg Divorce Attorney Today
At The Bardine Law Firm, we understand the stakes. Unexpectedly falling from two incomes to one, on top of inheriting a large sum of debt, is a recipe for disaster. Our expertise lies in protecting the financial interests of high-income earners in Florida, ensuring that your divorce doesn’t derail your financial stability.