What happens to a couple’s debts in a New York divorce?

When dividing debt in divorce, people in New York should understand the laws and the consequences.

It is common for people in New York to wonder what will happen to their assets when going through a divorce. The family home, bank accounts and valuable collections may all be subject to division.

One aspect of the process that may be initially overlooked is that a couple's debts may also be divided. However, paying attention to this split is extremely important, because, as NerdWallet reports, the average U.S. household that has debt has $132,529 of it.

If splitting debt is done incorrectly, this could leave one or both spouses in serious financial trouble. People who find themselves in this position should have an understanding on how the state assigns debt and how to manage it effectively.

State laws

New York laws demand that marital property is divided on an equitable basis during divorce proceedings. In other words, assets are split based on what is fair, and not necessarily what is equal. Only marital property - and marital debt - may be divided. That means that, with few exceptions, an asset or a debt acquired during the marriage is subject to division.

When people cannot agree on how to divide assets on their own, a court may take into consideration factors such as the following:

  • How long the marriage lasted
  • The age and health of each spouse
  • Each spouse's income

The same factors apply when looking at debt division.

Dividing the debt

When it comes to actually splitting which spouse will be responsible for which debt, the decision is rarely black-and-white. For example, if one spouse kept a secret credit card and racked up large expenses, a judge could determine that the other spouse is not responsible for it.

In other circumstances, debt may be divided based, in part, on the assets each spouse gets to keep. It may be possible to trade certain property for debt. This would require an accurate assessment of what is owed as well as how much items are worth.

Considerations

Sharing debt gets tricky, especially in circumstances in which one spouse may lack the ability to pay. Consider a $40,000 credit card debt in which each spouse assumes responsibility for half the amount. One spouse makes payments on time, but the other falls short every month. In that case, creditors would still come after both people, as both are responsible.

That said, when dividing debt, experts recommend that whenever possible, each debt is assigned in its entirety to just one person. Again, this may require a balancing act and the help of experienced professionals.

People who are in this situation should consult with a family law attorney in New York.