Splitting up or paying off debt when you divorce

On Behalf of | Feb 10, 2019 | Divorce, Firm News |

Couples in Florida who get separated and plan to divorce know they will have to go through the process of splitting up their assets. In addition, they will also have to decide how to split up any joint debt. This may not always be an easy task, especially if the couple may be in need of serious debt relief help such as via a bankruptcy. Understanding how debt is viewed during and after a divorce is important prior to making any final decisions.

As Money Management International explains, a person cannot rely on the provisions of a divorce decree to protect them from creditors. If a debt was in both spouses’ names, then the creditor has the right to pursue both people to receive payment regardless of who the divorce agreement said was responsible for the debt. That said, the person not liable per the decree may be able to legally pursue recourse from their former spouse but there would be a cost associated with that. 

Many recommend that couples find ways of eliminating joint debt prior to initiating a divorce. For some people, this may be achieved via transferring debt to new accounts in only one person’s name. For others, there may be a need to consider filing for bankruptcy.

My Horizon Today points out that divorcing spouses will need to work cooperatively together when filing a joint bankruptcy. If there is a high level of animosity or conflict between the spouses, this may not be possible and the divorce may have to take place prior to any bankruptcy.