Divorce is a difficult experience for anyone. Sometimes a divorce may even lead to bankruptcy. If you and spouse are going through divorce and bankruptcy proceedings at the same time, you should know the implications of your actions related to debt and divorce.
Types of Personal Bankruptcy in Florida
What type of bankruptcy you or your spouse has filed in Florida will have an impact on a concurrent divorce.
Chapter 7 Bankruptcy
This will allow for most forms of debts to be discharged. If you are seeking a fresh start to clear your debt in bankruptcy, this could be a preferred option for you.
Chapter 11 Bankruptcy
This will prevent debtors from incurring the loss of valuable property. This approach involves a restructuring of your existing debts, with an aim to make payments in a manageable way over a longer period of time.
Married couples under the Florida bankruptcy law are permitted to file a single bankruptcy petition and may even use the same attorney. However, if one of you files for divorce after you file bankruptcy as a couple, you will need to seek a separate bankruptcy attorney. Having the same attorney will create a conflict of interest.
A bankruptcy filing could be advantageous to both parties in a Florida divorce. It can simplify the legal process by eliminating debts and assets.
Partition of Debt in Divorce
Florida follows the law of equitable distribution, which means the debts and assets are distributed fairly.
However, “fair” may not always mean that debt division in divorce will be 50/50. The person with a higher income could take on more of the debt.
This is the debt that a spouse may have from before marriage. This kind of debt will not be split in a Florida divorce.
This is debt in the name of one spouse only. This could be in the form of a business loan or a credit card which is used only by one spouse. The debt would not be split if only one of the spouses benefited from it.
This type of debt in marriage typically includes mortgages, auto loans, and joint credit cards. This is considered a joint marital debt in Florida because both spouses are expected to have benefited from it.
In this case, under Florida law, debt division in divorce would be the responsibility of both parties.
Debt Division in Divorce
The joint debt in a Florida divorce will be split in a ratio that will be determined according to the circumstances surrounding the debt. If one spouse is proven to be a high or careless spender, who led to most of the debt, they may have to assume a larger portion of the debt in a divorce.
Florida courts will assign the debts each spouse is required to repay, just as they would determine the asset division in a divorce.
Once the marital debts have been split, your first concern should be to have your name removed from the debts that are now the responsibility of the other party. This is so that it will not adversely affect your credit score if the other party delays debt repayments.
If you are having problems with bankruptcy, then you need someone who cares. Patrick Cordero is an experienced divorce and bankruptcy attorney in Florida. Contact us today at 786-460-3968 to schedule an appointment.