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What is Marital Debt?

Marital debt is debt that is acquired by either spouse during the marriage. Common types of marital debt are credit card debt, mortgages and home equity loans, medical bills, and automobile loans. This kind of debt is often accrued for the benefit of the marriage, such as buying a home. An exception exists where a creditor had secured separate property belonging to one spouse, such as a lien on a property that was owned by one spouse prior to the marriage.

Debt that was acquired separately by one spouse before the marriage may considered marital debt if that debt benefited the marriage or the other spouse in some way, or if the other spouse takes part in payment of the debt.

How is Marital Debt Divided in Divorce?

Marital debt is divided the same way that marital assets are divided in divorce. On Long Island, New York, marital property and marital debt are divided “equitably”. This does not necessarily mean that they are divided equally, but that they are divided fairly. The debt can be divided either by private agreement between the spouses or by the court overseeing the divorce. Sometimes spouses are able to agree among themselves privately, or by seeking the guidance of a divorce mediator. Spouses might come to an agreement as part of a negotiation or settlement based on what the expected outcome would be if the matter were to go to court.

Courts will consider the amount of the debts, how each debt was acquired and for what purpose, and which spouse was most benefited from taking on the debt. The court will also review each spouse’s finances in order to assess whether one party is more capable of more capable of paying the debt.

How is Student Loan Debt Divided in Divorce?

Student loan debt will be divided the same way that other debts are divided. Like other forms of debt, student loans can be personal or marital property, depending on when they were acquired and how they are paid. A court will consider how the student loan proceeds were used. For example, if student loan proceeds were used for household and living expenses, thereby benefiting both spouses, this would likely be classified as a marital debt even if the loan was taken out by one spouse.

How Does Allocation of Debt Relate to Distribution of Property?

Since the courts in Nassau County and Suffolk County will look for the fairest way to divide both debts and property, it is unlikely that one spouse will end up with more of the debt while the other ends up with more assets. It is instead likely that if one spouse is taking on more debt, he or she will also take on more assets in the divorce. For example, if you have a vacation property with a mortgage, and choose not to sell the property, the spouse who takes the vacation property in the divorce is also likely to assume the mortgage or refinance on his or her own. While there is no exact formula, and several factors may come into play, the general rule of thumb is that the division should be fair and equitable.

What Else Should I Consider When it Comes to Debt in My Divorce?

Gather all of your most recent statements reflecting any debt belonging to you and your spouse. Income information such as tax returns and recent pay stubs will also be needed. You will need to think about whether any of your property will be sold so that debts can be paid off, or how secured loans such as mortgages will be paid if you choose not to sell. You might think about whether refinancing a property is a good idea in this regard. Another consideration is whether there are ways that you and your spouse will divide the debt and assets in such a way that seems fair to you both. It is a good idea to speak to a divorce lawyer or divorce mediator in order to begin to understand your options.

Contact an Experienced Long Island Divorce Attorney for Answers to Your Debt & Divorce Questions

Determining how debts, as well as other property, will be divided in divorce can be a complicated and emotionally trying process. If you are dealing with divorce and have questions about distribution of debts and property from your marriage, you need the guidance of a seasoned Long Island Divorce Attorney. The divorce law firm of Hornberger Verbitsky, P.C. serves clients throughout Nassau County and Suffolk County, and is experienced in all aspects of divorce mediation, divorce litigation, and family law on Long Island. Contact our office today at 631-923-1910 to schedule a free consultation.

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


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