How to Handle Joint Debts During a New York Divorce

Divorce can bring many challenges, and one of the most difficult issues to resolve is how to handle joint debts. When a marriage ends, it is important to address financial responsibilities and make sure that debts are managed properly. In New York, the law treats debt in specific ways during divorce proceedings. Understanding how joint debts are divided and what steps you can take to protect yourself financially can help make this process less stressful. At, Cole, Sorrentino, Hurley, Hewner & Gambino, P.C. , we are here to guide you through the legal process and help you navigate the complexities of your case.

Richard H. Cole
Partner

Thomas F. Hewner
Partner

Donna L. Haslinger
Partner

Vivian P. Roche'
Partner

Keith R. Rosso
Attorney

Tasha D. Frazie
Attorney

What Are Joint Debts?

Joint debts are any financial obligations that both spouses are responsible for during the marriage. These can include credit card balances, car loans, mortgages, or personal loans that both partners agreed to take on. Even if one spouse handled the payments or used the credit more than the other, these debts are often considered the responsibility of both individuals. This can lead to complications when deciding how to divide the debts during a divorce.

New York follows the principles of equitable distribution, which means that assets and debts are divided fairly, though not necessarily equally. Joint debts are evaluated as part of this process, and the court considers factors like each spouse’s income, financial needs, and the circumstances that led to the debt. Knowing how the law works and keeping accurate records of your financial situation can help you navigate this step.

How New York Courts Divide Debts

In a New York divorce, courts take several factors into account when deciding how to divide joint debts. Unlike some states that divide debts equally, New York looks at what is fair based on the situation. The court may examine when the debt was incurred and for what purpose. Debts that were taken on for family needs, such as a mortgage or car loan, are often divided between both parties.

The court also considers whether the debt was taken on before or during the marriage. If one spouse brought significant debt into the marriage, that debt might remain their sole responsibility. On the other hand, debts taken on together during the marriage are usually shared, regardless of who made the payments. However, if the debt was used for a personal expense that did not benefit the marriage, the court might assign it to the spouse who incurred it.

The Importance of Financial Documentation

One of the most important steps you can take when dealing with joint debts during a divorce is to gather all financial records. This includes statements for credit cards, loans, and any other joint accounts. Having clear documentation helps show the court where the debts came from and how they were handled during the marriage.

If possible, try to agree with your spouse on how to divide the debts before going to court. Negotiating can save time and reduce stress. However, if an agreement cannot be reached, having organized records can make it easier for the court to make a fair decision. Keep copies of all documents in a safe place and make sure they are complete and up to date.

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Protecting Your Financial Future

After a divorce, it is important to protect yourself from being held responsible for debts that are no longer yours. Even if the court assigns a debt to your spouse, creditors can still hold you accountable if your name is on the account. This is why it is important to close joint accounts and refinance loans into one person’s name whenever possible.

If your spouse is supposed to take over a joint debt but fails to make payments, it could harm your credit score. To avoid this, consider requesting that the court include clear instructions in the divorce agreement about how debts should be handled. You can also monitor your credit report regularly to make sure payments are being made as agreed.

Handling Credit Card Debt

Credit card debt is one of the most common types of joint debt that couples face during a divorce. If you and your spouse shared a credit card account, both of you are usually responsible for the balance. The court will decide how to divide the debt, but creditors are not bound by the divorce agreement. This means that if your spouse does not pay their share, you could still be responsible.

To avoid this problem, it is often a good idea to pay off joint credit card balances before finalizing the divorce. If that is not possible, you might want to work with your spouse to transfer the balances to individual accounts. This can help ensure that each person is only responsible for their share of the debt.

Mortgage Debt and Divorce

A mortgage can be one of the most complicated joint debts to manage during a divorce. If both spouses’ names are on the loan, the lender will hold both of them responsible for the payments, regardless of who stays in the home. In some cases, one spouse might choose to refinance the mortgage in their name alone. This allows the other spouse to be removed from the loan and eliminates their responsibility for future payments.

If refinancing is not an option, the couple may decide to sell the home and use the proceeds to pay off the mortgage. This can provide a clean break and help both parties move forward without financial ties to the property. However, selling a home can take time, and it is important to plan for how mortgage payments will be handled during the process.

Student Loan Debt and Divorce

Student loans are another type of debt that can cause challenges during a divorce. In New York, whether student loans are considered joint debt depends on several factors. If the loan was taken out before the marriage, it is usually considered separate debt and remains the responsibility of the person who borrowed the money. However, if the loan was taken out during the marriage and benefited both spouses, the court might divide it as part of the divorce.

The purpose of the loan and how the funds were used can also affect how the debt is divided. For example, if the loan was used to pay for tuition that increased one spouse’s earning potential, the court might consider this when deciding how to allocate the debt.

Steps to Take During Divorce Proceedings

Handling joint debts during a divorce requires careful planning and attention to detail. Start by making a list of all debts and determining whether they are joint or separate. Work with your attorney to understand your rights and responsibilities under New York law. If possible, try to reach an agreement with your spouse about how to divide the debts fairly.

It is also important to think about your financial future and take steps to protect your credit. Closing joint accounts, refinancing loans, and creating a clear plan for managing payments can help you avoid problems after the divorce is finalized. Remember that creditors are not bound by the divorce agreement, so taking proactive steps can reduce the risk of financial complications.

The Role of Legal Guidance in Debt Division

Dividing joint debts during a divorce can be a complex process, and it is important to have the right legal guidance. An experienced attorney can help you understand how New York law applies to your situation and work with you to create a fair and workable plan. Legal advice can also help you avoid common mistakes and protect your financial interests.

If you are facing challenges with joint debts during your divorce, seeking legal assistance early in the process can make a significant difference. A skilled attorney can help you gather the necessary documentation, negotiate with your spouse, and advocate for your rights in court if needed.

If you are going through a divorce and need help managing joint debts, the experienced team at Cole, Sorrentino, Hurley, Hewner & Gambino, P.C. is here to support you. With a strong understanding of New York divorce laws and a commitment to protecting your financial future, we can guide you through this difficult time. Contact us today to discuss your situation and learn how we can help you move forward with confidence.