Though the divorce rate has declined slightly in recent years, there may still be a 40 to 50 percent chance that a marriage will end in divorce. When it comes to property division, how assets are divided often depends on the state where one lives. Florida is an equitable distribution state and that also pertains to how debts will be addressed.
In an equitable distribution state, the court will work to ensure that debts are divided as fairly as possible in the absence of a prior agreement. One of the most common types of marital debt is a mortgage for which there are options available to settle this matter. If the home is titled in both names, then one spouse may choose to retain ownership and seek to refinance the debt in his or her name. The former spouse could either be bought out or a home equity loan could be obtained to pay the former spouse. The home could also be sold and the profits divided.
Credit card debt could be divided equally if the account was a joint account, or the parties could seek to have the debt split into separate accounts. These debts could also be handled between the spouses privately according to a separation agreement. Auto loans and student debts are two other types of debts that may be subject to division — even if the debt was obtained by only one partner.
One of the main reasons why couples may be best served by dividing debts through a settlement agreement is to ensure that one party does not become liable for payments due to default by the other spouse. If a former spouse willfully breaches the settlement, then he or she could be found in contempt. Florida residents who are planning to divorce may seek the advice of an experienced attorney in order to reach the most equitable property division agreement.
Source: wisebread.com, “What Happens to Debt After Divorce?“, Holly Johnson, March 30, 2018
