Indemnification clauses in contracts are not unique to Florida divorces, but state law does honor these provisions when they’re made in marital settlement agreements. If you include an indemnification clause in your agreement, it can offer you an added layer of protection if your spouse files for bankruptcy as soon as the ink is dry on your divorce judgment. It can also work to your advantage if you have to take your spouse back to court to enforce the terms of your judgment.
Like all states, Florida is perfectly willing to allow you and your spouse to settle the terms of your divorce on your own. In fact, some counties go a step further – the court won’t schedule your case for trial until you’ve first attempted to resolve your differences in mediation. If you reach a settlement, you can make sure to include an indemnification clause in the written agreement you submit to the court in lieu of a divorce trial. Although you can create and sign a separate agreement for indemnification, it’s usually easier to just include the terms in your marital settlement agreement. Even if you do end up going to trial, a Florida judge may incorporate indemnification clauses in the judgment he issues.
Marital Debts and Obligations
Your settlement must address debts and liabilities that you and your spouse incurred together, but your agreement won’t have any effect on your creditors. If you and your ex jointly took out a credit card and charged $5,000 on it, you both might agree that your spouse is going to take responsibility for paying it. But even if you state this in your divorce agreement, the lender can – and probably will – come after you instead if your spouse doesn’t pay as she’s supposed to. Contractually, you remain obligated for the loan no matter what your settlement agreement or divorce judgment says. Including an indemnification clause can give you recourse if this should happen.
An indemnification clause states that one spouse indemnifies or relieves the other from a responsibility she’s taking on under the terms of the marital settlement agreement or divorce judgment. She’s agreeing to hold the other harmless from financial liability for the debt she’s legally responsible for or if she fails to perform as she’s agreed to. Court orders are powerful and settlement agreements are enforceable as contracts, but indemnification language adds an extra layer of protection. The clause allows you to take your ex back to court and not only ask for reimbursement if you have to pay a debt she was supposed to pay, but to seek damages as well. This might include paying your attorney’s fees or paying you interest. Without an indemnification clause, all you’re typically entitled to is the right to get your money back.
Protection Against Bankruptcy
An indemnification clause can also be helpful if your spouse files for bankruptcy after your divorce. Domestic support obligations are never dischargeable in bankruptcy, but before the Bankruptcy Abuse Prevention and Consumer Protection Act took effect in 2005, marital debts that fell outside this scope were. Your ex could not discharge a past due alimony or child support obligation, but she could wiggle out from having to pay debts she took on under the terms of your divorce judgment. Indemnification agreements were essential to create legal liability from one spouse to the other that the bankruptcy court could recognize as creating a non-dischargeable debt. Currently, debt obligations that arise from a divorce are no longer dischargeable in Chapter 7, but they are in Chapter 13. Although indemnification language is no longer required to bar discharge in Chapter 7, it certainly can’t hurt to include it. Under bankruptcy law, these clauses create a legal obligation separate from – and in addition to – your divorce judgment.