How to Deal with Marital Debt in Your Long Island Divorce

For many Long Island couples, the issue of debt in your divorce can be a highly contentious topic. While married, you may not consider the ramifications of the $30,000 in credit card debt that was racked up to keep your family afloat. However, once the word “divorce” gets thrown around, that $30,000 is yet another hurdle to be dealt with.

Who is Responsible for Marital Debt?

For many people, the most pressing question is “who is responsible for the debt?” In New York, divorce laws are governed by the doctrine of equitable distribution. This means that the property acquired during your marriage will be divided equitably, not necessarily equally. This same concept applies to marital debt, so that debt acquired during the marriage will be divided equitably.

Courts on Long Island will take into account who incurred the debt and for what purpose. For example, if it seems your spouse went on a $20,000 shopping spree the day before he or she filed for divorce, the court may not hold you responsible for the full $20,000. Alternatively, if your spouse incurred debt to get his or her Masters degree, you may be responsible for a sizeable portion of that debt.

Will I Always be Responsible for My Spouse’s Debt?

As with many things in your Long Island Divorce, you and your spouse may enter into a Stipulation of Settlement which would specifically deal with your debts. Most Stipulations will have an entire article devoted to the issue of marital debt. During the pendency of your divorce, your attorney will be negotiating the issue of marital debt. When you and your spouse have reached an agreement, your attorney will draft your Stipulation accordingly. Your divorce attorney will include who is to be responsible and for what amount, who the creditor is, how much in total is owed, when the payments are to be made and in what increments.

What if We Can’t Afford to Pay the Debts Back?

Unfortunately, it is not uncommon for us to come across couples who cannot make the minimum payments owed on their debts. For many of these couples, they need to get creative. One of the largest and most valuable assets some couples have is the marital residence. While certainly emotional, sometimes the sale of the marital residence can solve a majority of the issues surrounding the marital debt. After the sale of the home and the satisfaction of the mortgage, the marital debt can usually be paid off, or at least greatly reduced, with the proceeds of the sale. If you and your spouse determine that this is the best option in dealing with the debt, your attorney will include such a provision in your Stipulation, ensuring that the proceeds go directly to paying off the marital debt.

Are there any Preventative Measures I Can Take?

During the pendency of your Long Island Divorce, it is very important that you keep records of your finances. When specifically discussing marital debt, one of the biggest issues is joint credit cards. In this regard, it is extremely important that you and your spouse cancel all joint credit cards. Moving forward, you each will have separate credit cards that you can utilize how you see fit without having to be concerned about what the other person may be charging in your name. I have found that many couples do not heed this advice, and that is certainly your choice, but it is also important to remember that Visa and American Express do not care that you and your spouse are getting divorce and he or she only charged that much because he or she is trying to “ruin you.” If the card is in both of your names, credit card companies will hold you both responsible.

Have Questions about Marital Debt? Contact Us

Dividing marital debt and preventing further financial issues is one of the most important, and complex, issues surrounding your Long Island Divorce. If you have further questions, we encourage you to contact our Long Island Divorce & Family Law firm at 631-923-1910 to set up your free consultation.

For more information about Property Division in your divorce, visit our Complete Guide to Dividing Property in Divorce.