Divorce can be challenging both emotionally and financially for the couple. One of the many challenges that arise during the course of a divorce is the issue of how to handle joint debts. The separation of debts during a divorce is often complex and there may be confusion regarding who is responsible for handling the liabilities. Understanding how joint debts are handled and their implications in a divorce is crucial in ensuring your rights are protected. Reach out to a skillful Suffolk County property distribution lawyer for more information and skilled representation during your divorce.
What Are Joint Debts?
A joint debt is any financial contract or agreement that two or more parties share. When several individuals share joint debts, they are both responsible for the entirety of the amount owed. In a marital relationship, a couple will generally share many forms of joint debt. Any money owed that has both spouses’ names on the account will be considered joint. This can include the following and more.
- Mortgage loans
- Car loans
- Credit card debt
- Medical bills
- Household bills
What is Equitable Distribution?
New York, like many other states, is what is known as an equitable distribution state. This means that when two individuals decide to end their marriage, any and all shared property will be divided in an equitable manner. Because it is not an equal distribution, each party will not necessarily walk away from the marriage with half of the assets. Instead, a court will determine an equitable split that gives both individuals their fair portion of the property. The goal of equitable distribution is to ensure that the divorce does not leave one party financially destitute or significantly impact one person in a negative way.
When determining a fair distribution of assets, the court will consider a variety of factors including each spouse’s income, earning capacity, contributions to the marriage, future needs, and more.
How Are Joint Debts Handled in a Divorce?
Under New York law, during a divorce joint debts are handled the same way that joint assets are handled, through equitable distribution. Once it has been established which liabilities are joint and which are separate, the court will evaluate each party’s financial and personal situation to determine who should bear the responsibility moving forward.
They may consider who incurred the debt, the debt’s intended purpose, how it was used, each spouse’s ability to pay, how much is owed, and more. In New York, the division of marital liabilities is all about fairness.
The couple can also negotiate among themselves to determine how their debts will be divided. They may decide that one spouse should take on a larger portion of the debt in exchange for additional property or assets, or they may determine that a loan that only one of them used should fall to that person.
There are many ways to determine how debts will be divided and handled during a divorce and it is essential that you understand how to protect your rights. Reach out to a skilled attorney today for more information.
