In New York, including across the Five Boroughs and Long Island, joint debts are subject to division during a divorce in accordance with the equitable distribution method of dividing property. This means the court will divide responsibility for debts based on fairness, not necessarily equally. To determine how this debt will be divided, the judge assigned to the case will consider a number of factors, including who benefitted from the debt, the income of each spouse, and the financial circumstances of each party. It’s also important to understand that, in New York, even if a divorce order assigns debt to one spouse, creditors can still pursue both spouses for jointly held debts. The following blog explores what you should know about the division of assets in New York and why working with a Long Island property division lawyer is in your best interest during these difficult times.

How Does New York Divide Property During a Nassau County Divorce?

Under New York Domestic Relations Law § 236(B), courts in Nassau County, and across the state, utilize the equitable distribution law when dividing both marital assets and debt. In New York, assets are either marital, meaning they are technically owned by both spouses, or separate, meaning they are owned solely by one spouse. Only marital property is subject to division during a divorce, as both spouses will retain their own separate property.

Once your assets have been accurately classified, it’s imperative to understand how these marital assets are divided. New York adheres to the equitable distribution method when dividing marital assets among a divorcing couple. Essentially, this means that assets are not automatically divided evenly but rather based on each spouse’s contributions to the marriage. The court will examine several factors when determining how to divide the assets.

Key Factors Considered in Equitable Distribution

  • How long the marriage lasted
  • The age and health of each spouse
  • The income and earning potential of each spouse
  • The financial and domestic contributions each party made to the marriage
  • The current custody arrangement
  • Whether or not one spouse is accused of marital waste
  • Any tax consequences incurred by either party
  • The value of each spouse’s separate property

How Are Joint Debts Handled During a  Divorce?

It’s imperative to understand that when your property is divided, it is not just your assets that the court will examine. Your joint debts and liabilities are also taken into consideration during this process to ensure the split of debts is fair. Typically, these will be split the same way assets are – based on equity as opposed to equality.

How Courts Decide Who Pays Joint Debts

  • Who incurred the debt, and what purpose the debt served (supporting the household vs. personal use)
  • Which spouse primarily benefitted from the debt
  • The ability of each spouse to repay the debt following the divorce
  • If the debt is tied to a specific asset, like a mortgage or auto loan
  • Financial misconduct, like reckless spending
  • Any existing contracts between the spouses, like a prenuptial or postnuptial agreement

Examples of How Debt May Be Divided

  • Credit cards that are jointly opened are typically split, even if one spouse used the card more
  • Debts tied to jointly owned property, like a home, typically follow the asset
  • Individually opened accounts remain the sole responsibility of the spouse
  • A judge may assign a higher-earning spouse more debt for fairness
  • A judge may also assign debt spent recklessly using joint cards to the spouse who spent the funds

Important Risks with Joint Debt After a Long Island Divorce

It’s critical to understand that, while your divorce decree may divide responsibility for debt, creditors and collectors are not bound by divorce agreements. As such, if both spouse’s names are on the debt, the creditor has the legal right to pursue both for the debt, even if the court assigned liability to one spouse.

Financial Risks You Should Be Aware Of

  • Missed payments by your ex-spouse can negatively affect your credit score
  • Creditors can pursue payment from both spouses, even if the court ordered one spouse to assume responsibility for the debt
  • Joint accounts left open may result in new, unauthorized debts
  • Refinancing or closing accounts may be necessary
  • If debts go unpaid, wages may be garnished (withheld)

Steps to Protect Yourself from Joint Debt Liability in New York?

When going through a divorce, taking proactive steps before and during this process can help reduce the risk to your finances, helping you sustain long-term stability following your divorce. This is imperative to set you up for success when starting the next chapter of your life.

Practical Steps to Take During a Divorce

  • Close or freeze joint accounts when possible
  • Refinance debts into the name of one spouse
  • Regularly monitor your credit report
  • Document all debts to ensure they are all accounted for in your divorce agreement
  • Work with an experienced Long Island divorce attorney during this process

Contact an Experienced Long Island Divorce Attorney Today

Dividing joint debts in a divorce can often be a contentious matter. As such, working with an experienced attorney to discuss your legal options is in your best interest during these difficult times. At the Law Offices of Jay D. Raxenberg, our team understands how important it is to ensure your best interests are protected during a divorce. When you need help, contact our team today.