During a divorce, all assets and liabilities acquired between spouses are subject to equitable division between them. This means that any debt incurred by either spouse during their marriage is divided according to what the court deems fair.
When it comes to dividing marital debt in a divorce, the court assigns each spouse’s debt according to the standards set forth by state law. The division of debt may be adjusted upon request from either party if there is evidence that one person should not be held responsible for all or part of a particular debt.
It is important to note, however, that these adjustments can only be done under certain circumstances and must be approved by the court.
Equitable Does Not Mean Equal
A common misunderstanding is that “equitable division” or “equitable distribution” means that something is divided evenly between spouses. This is not the case, as the term “equitable” refers to what is considered fair or reasonable.
In this case, it’s the court – or rather, a judge – who must consider the division of a couple’s debt to be fair or reasonable. That can mean an equal division of debt, but not necessarily so.
One Spouse Is Typically Responsible for More Debt
In most Florida divorces, one spouse ends up responsible for a greater portion of the couple’s debt. This can happen for various reasons, but in most cases, it occurs because the court considers that spouse to be in a stronger financial situation post-divorce.
In other words, the spouse assigned more debt may have a stronger income, more separate assets, and fewer separate debts than the other spouse. Ultimately, judges seek a balance between creditors’ interests in debt and either spouse’s ability to pay that debt.
What Are Separate Debts?
Separate debt is generally considered debt that someone brought into the marriage. The most common separate debt people tend to have these days is student loan debt. Because debt such as this was assumed before someone was married, then it may not be subject to equitable division during divorce.
What If One Spouse Is More Responsible for Shared Debt?
Generally, any debt created during marriage is subject to equitable distribution regardless of who created it. This can be the case even if a spouse opened a credit card in their own name – the debt travels with the marriage, not necessarily the individual unless it’s separate debt.
That said, there can be situations in which judges will consider assigning such debt solely to the spouse responsible for it. This may be done in cases involving wasteful dissipation, which occurs when a spouse engages in spending behavior that solely benefits them or is intended to damage the couple’s finances.
Examples of wasteful dissipation can include the following:
- Gambling debts
- Purchasing illegal substances
- Spending money on an affair
- Gifting money or property away to others, even relatives
Do You Have Questions About Debt During Divorce?
By remaining informed about how debts will be handled during a divorce in Florida, divorcing couples can plan ahead for potential problems and make sure that their interests are properly represented throughout the process. In this way, they can protect themselves from financial hardship moving forward with their lives.
When you need help understanding how debt can play a role in your divorce, Tinny, Meyer & Piccarreto, P.A. can help. For more information, contact us online.