Couples divorcing in New York often share significant personal assets and major debt. You will need to reach an agreement regarding the division of your financial lives or ask the courts to help you.
If a judge is the one dividing your property, they will apply the New York equitable distribution statute. This requires that they look at your personal circumstances and the records from your marriage to arrive at a fair and reasonable solution for splitting your property. They will also have to divide your debts as part of this process.
What does equitable distribution mean when it comes to your debts?
When and why you took on a debt matters the most
When a New York family law judge looks over your financial circumstances to split your property and your debts, they aren’t going to base their decision on whose name is on the credit card or who signed for the transaction. Instead, they will look more closely at when someone opened the account, when they accrued the specific debt and why they accrued that debt.
Usually, debts from during the marriage and for the intention of supporting the household are marital debts that a couple will need to share. If one spouse uses a joint credit card to pay for a hotel room while conducting an affair, they may be solely responsible for that debt. However, if one spouse takes out student loans while married with the intention of getting a better job to support the family, both spouses may have to share the debt for their education.
You will likely have to come to an agreement about how to handle your joint accounts outside of court if you need to preserve certain assets or lines of credit for future use. You may also have to share responsibility for the balances on accounts held individually by either spouse.
Debts and assets may balance each other out
Judges may allocate certain accounts to each spouse or may use the debts to justify other asset division decisions. You usually can’t predict exactly what a judge will do with specific debt, but you can at least determine whether they are likely marital or separate debts.
Carefully reviewing your financial record can help you prepare for property division in a New York divorce.
