Who is Responsible for Debt in a Divorce?
You and your spouse have decided to get a divorce. You may be concerned about who is getting the house or maybe the cars. Can you keep the furniture?
Assets are often a major concern, but there is something else you need to worry about – debt. Unfortunately, debt does not go away when you file for divorce. It is still there, and it needs to be handled by one or both parties. How is debt divided in a New York divorce?
Laws that govern the division of debt vary from state to state. They also vary based on the type of debt. For example, in community property states, debts accrued during the marriage are the responsibility of both parties. However, New York is not a community property state, so the debt is split a little differently.
Responsibility for Various Types of Debt
In many marriages, there is one person who spends money recklessly, racking up high levels of credit card debt. This can be concerning, particularly in a divorce. However, under New York law, if your spouse has a credit card in his or her name only, only he or she is responsible for paying back the debt. The same goes for any other types of unsecured debts.
What about other types of debt, such as car loans, mortgages, and personal loans? In states that do not operate under community property laws, such as New York, the debt is shared by both parties only if they co-signed the loan application. This means that you both will likely be on the hook for debt such as mortgages and auto loans.
This can be tricky, though, because it is often difficult for one spouse to refinance and put the home in his or her name only. You could keep both parties on the mortgage and have the person staying in the home liable for the payments. However, this requires a significant amount of trust because if that person does not make the monthly payments, you will be on the hook. The other option is to sell the home and split the proceeds.
The same goes for a vehicle. One person could pay it off or refinance it, or the decision could be made to sell it and split the profits.
Having a prenuptial or postnuptial agreement in place is the best way to decide how to deal with these types of debts. It is best to eliminate shared debt in a divorce and try to sell as many assets as possible. A lawyer can advise you of the best options in your situation.
Contact a Divorce Lawyer Today
When many people divorce, they tend to focus on splitting assets. However, they need to think about debt, as well. This can be concerning if your spouse tended to spend money freely while you were married. By seeking legal help, you can understand your financial responsibilities and legal options.
Divorcing with a significant amount of debt? Seek help from Brooklyn divorce attorney Theodore Alatsas ESQ. He can help you understand how debts are split in a New York divorce. Contact his office and schedule a consultation by calling (718) 233-2903.