Plenty of Florida couples place the bulk of their divorce efforts on dividing marital wealth, and rightfully so. The outcome of property division negotiations can have a lasting impact on both spouses for many years to come. However, it is a mistake to overlook the importance of addressing issues of debt during the larger property division process.
In general, debt that is brought into a marriage is considered the separate responsibility of each spouse during a divorce. Debt that is taken on during the marriage is usually considered to belong to both spouses, even if the debt was incurred in a way that benefited only one party. Spouses can negotiate how to divide that debt, just as they negotiate the division of assets. However, reaching an agreement about who will be responsible for which accounts is only the beginning.
Creditors are not bound by a divorce settlement. They have the right to pursue any party listed on an account for repayment, regardless of what the agreement states. That means that a spouse who is freed from responsibility in the divorce agreement could still be subjected to collection efforts if his or her name remains on the account and the other party fails to pay. Credit score damage is also a real concern, as is debt that has a negative impact on one’s debt-to-income ratio.
The only way to remove these risks is to either pay off individual debts entirely during the divorce process, or have the account placed in the sole name of the responsible party. In cases in which one spouse agrees to take responsibility for a large debt, the best way for the other person listed on that account to protect his or her own interests is to negotiate a property division settlement that requires that other assets are used to pay off the account in full. This can help many Florida residents sleep better at night, knowing that they have been fully absolved of any responsibility associated with old debts.
Source: The Huffington Post, “Divorce and Credit Card Debt“, Justine Borer, April 3, 2017