For most Florida spouses who are preparing to go through a divorce, the division of marital property will be a top priority. When preparing to address the issue, however, spouses should be aware that the division of debt is also part of the property division process. Couples will have to deal with their credit card debt as they prepare to go their separate ways, and for those who hold a high level of debt, the outcome could bring additional financial strain.
In most cases, debt amassed during the course of a marriage is considered to be the responsibility of both spouses. When divorce is on the table, these accounts will need to be divided. Deciding which spouse will be obligated to pay which account is part of the negotiation process. Before these discussions begin, savvy spouses will review the credit reports of both parties to check for debts that have been forgotten or of which only one spouse was aware.
Once both parties have agreed on a division of marital debt, it is essential that steps are taken to remove the other party’s name from those accounts. This protects a spouse from credit damage should the other party fail to repay his or her financial obligations as agreed. Creditors have no interest in the divorce agreement that a couple reaches; they will pursue collections from all parties listed on the account.
When approaching credit card debt during a Florida divorce, spouses must take a long-term view of the matter. Regardless of the agreement reached within the divorce process, individuals can be held accountable for debts that remain in their name, even if they are no longer responsible for paying those bills. One way to avoid this outcome is to use existing marital assets to pay down shared debt before the divorce is made final. It is important to take steps that will protect not only one’s current financial standing, but that also look after an individual’s long-term interests. In many cases, filing for bankruptcy is the best solution.
Source: Fox Business, “Debt and Divorce: 5 Steps to Make a Clean Credit Split”, Dawn Papandrea, July 14, 2014