When couples get divorced, they often focus on dividing their assets. They may split up their bank accounts or investments. They may sell a family home and divide the proceeds. Some even sell a family business that they own together.
But what about their debts? Most couples have at least some kind of debt, so how do they handle it? Who has to pay the debt and how do they address it when ending their marriage?
Splitting up marital debt
Many types of debt qualify as marital debt because the couple took on that debt while they were married. An example of this is if a couple has a joint credit card account. They will both likely be liable for any charges on that account, unless one ran up charges without the other’s knowledge and the court views the charges as so egregious that they assign the debt to one spouse. With that said, though, the credit card company can come after either spouse for repayment as long as both names are on the account.
Under “normal” circumstances, if spouses get divorced, it may be best to simply pay off any marital debt and close the affected accounts. But if that is unaffordable, spouses will have to find a way to divide that debt.
Some types of debt may be separate
Even though marital debt generally needs to be divided equitably under New York law, some debts may be classified as separate. These are debts that one person likely brought into the marriage and took out on their own.
For example, maybe a couple met in college and they had both taken out their own student loans before they even started dating. Those loans would be separate forms of debt that do not have to be divided during the divorce. But if one person went back to college during the marriage, and the couple took out student loans jointly, then they would likely have to split up the debt – even if only one person was attending college.
The process of dividing marital assets and debts can certainly get very complicated, as all financial issues can during a divorce. Couples going through this process need to know about their legal options and the steps they can take to safeguard their interests. Seeking legal guidance can help to provide necessary clarity and support.