In a Florida divorce, debt is divided through a process of equitable distribution under Florida Statutes Section 61.075. This means that joint debt (marital debt), incurred during the marriage, is split between the spouses in a fair and equitable manner. Equitable does not mean equal. In addition to marital debt, there are pre-marital and non-marital debts. These types of debt are treated differently than marital debts.
What Are the Types of Debt in a Florida Divorce?
During Florida divorce proceedings, debts are categorized into three types: pre-marital debt, marital debt, and non-marital debt. The list below contains the three categories of debt.
- Pre-marital debt includes debt incurred by either spouse before entering the marriage
- Marital debt is any joint debt that is incurred during the course of the marriage
- Non-marital debt is debt that is incurred in the name of one spouse and is not paid with marital funds.
Each type of debt is treated differently by Florida law.
What is Pre-Marital Debt?
Pre-marital debt consists of financial obligations that either spouse had before entering the marriage. For example, if one spouse enters the marriage with a significant student loan from their college education, this debt would typically be considered premarital debt. Credit card debts, personal loans, or any other debt obligations incurred prior to getting married is classified as pre-marital debt.
Is Pre-Marital Debt Distributed During a Florida Divorce?
In Florida, the spouse who incurred the pre-marital debt will generally be responsible for its repayment after the divorce.
What is Marital Debt?
Marital debt includes any debt obligations that were acquired during the marriage by either spouse individually or both spouses jointly. Marital debts include a mortgage on the marital home, car loans taken out during the marriage, or joint credit card debts used for family expenses. Marital debts can also include business loans that were used to start a joint business venture during the marriage.
How is Marital Debt Distributed in a Divorce?
In a Florida divorce, marital debt is subject to equitable distribution, meaning it will be divided fairly but not necessarily equally between the spouses. Florida courts will consider many different factors when deciding on an equitable division of debts, such as the current and future earnings of each spouse.
What is Non-Marital Debt?
Non-marital debt is any debt under only one spouse’s name that is not paid with marital funds. Examples of non-marital debt include a business credit card or business loan. Even if these debts are acquired during the marriage, Florida courts may consider this a non-marital debt.
How is Non-Marital Debt Distributed in a Florida Divorce?
During Florida divorce proceedings, non-marital debt is assigned to the spouse that incurred the debt.
How is Credit Card Debt Divided in a Florida Divorce?
In a Florida divorce, credit card debt is first classified as marital, non–marital, or pre-marital. Then it is divided using the following methodology. Marital credit card debt is divided equitably between the spouses during the divorce process. Equitably does not mean equally, rather courts will divide credit card debt based on factors such as each spouse’s income or ability to pay the debt.
Non-marital and pre-marital credit card debt is assigned to the spouse who incurred the debt. An example of non-marital credit card debt is a business credit card opened by one spouse, and paid using non-marital funds. An example of pre-marital credit card debt is credit card debt that was incurred before the couple was married.
How is Mortgage Debt Divided in a Florida Divorce?
Mortgage debt is distributed equitably between the spouses during the asset division process in a Florida divorce. This process attempts to divide assets and debts fairly between the divorcing parties. The following steps are used to determine how mortgage debt will be distributed during a Florida divorce..
- Identification of marital property: determine whether the property linked to the mortgage is classified as marital or nonmarital. Property that was acquired during the marriage and to which both spouses contributed financially to the mortgage or property is generally considered marital property.
- Value the property: assess the property’s value, including the remaining mortgage amount and any equity accumulated during the marriage.
- Decide on the property: determine whether the property will be sold, retained, or offset by other assets to satisfy the court’s view of an equitable division of the couple’s assets and liabilities.
a. Sale of the property: The court can order the sale of the property. The proceeds are used to pay off the mortgage and associated costs. Any remaining funds are then equitably distributed between the spouses.
b. Retention of the property: The court can allow one spouse to retain ownership of the house if they wish to keep it and they can afford to do so. The spouse retaining the property will generally need to refinance the mortgage in order to remove the other spouse’s name from the debt obligation.
c. Offset with other assets: The court can choose to offset the property’s value and mortgage debt by awarding the other spouse additional assets or a larger share of other marital property.
- Asses Non-marital contributions: The court will consider non-marital contributions such as one spouse owning the house before the marriage, or using non-marital funds to to contribute to the mortgage during the marriage.
How Is Student Loan Debt Distributed in a Florida Divorce?
In a Florida divorce, student loan debt is first classified, then distributed equitably between the spouses. Student loans can be classified as marital or nonmarital debt.
The steps below are used to determine the division of student loan debt in a Florida divorce.
Step 1: Classification of student loan debt – The first step is to determine whether the student loan debt is marital or nonmarital. Marital debt is typically debt incurred during the marriage for the benefit of the family or marital estate, while non-marital debt may include debts acquired before the marriage or after the date of separation.
Step 2: Assessment of spousal contributions – The court may consider each spouse’s contributions to the student loan debt during the marriage. This includes factors such as who incurred the debt, the purpose of the education, and who made the loan payments.
Step 3: Calculate equitable distribution: Once the student loan debt is identified as marital, the court will distribute it along with other marital debts. The goal is to divide the debt fairly based on various factors, such as the duration of the marriage, the financial and non-financial contributions of each spouse, their individual economic circumstances, and any other relevant factors. There is no predetermined formula for dividing student loan debt, so Florida courts have the flexibility to make decisions on a case-by-case basis.
How is Business Debt Divided in a Florida Divorce?
During the divorce process in Florida, a business can be divided if it is considered marital property. This requires determining the value of the business including both assets and debts. Business debts are generally classified as marital debts when the business was jointly owned by both spouses, or profits from the business are used to contribute to the financial support of the family. This means that Florida courts can choose to equitably divide these debts between the spouses during the divorce process.
How is Medical Debt Divided During a Florida Divorce?
In Florida, medical debt that is accrued during the marriage is considered marital debt. As such it can be divided equitably between the partners in a marriage. Exceptions to this rule include any medical debt that was incurred before the marriage or after separation.
How Is Tax Debt Treated in a Florida Divorce?
Under Florida law, any marital tax debt that was incurred during a marriage will be equitably divided between the spouses during the division of assets phase of divorce proceedings. Any tax debt that was incurred before the marriage or after the separation would be considered non-marital and not subject to equitable division.