After a couple marries, whatever they earn and buy becomes part of their marital estate. They do, however, have joint debts. When a couple divorces, their assets and debts are distributed. The division of marital debts is frequently essential. Ingrid Gherman, a New York City property division lawyer, should be consulted if you are getting a divorce in New York. She has more than three decades of marriage law practice.
During a divorce, the marital property is split fairly. Assets and property will be distributed according to fairness criteria, which may not result in a 50/50 split. This also means that any debt accumulated during the marriage will be divided, and the portion may not be equal. When debt is divided improperly, one of the partners may find themselves in financial difficulty.
All obligations incurred during a marriage that are due and payable at the time a divorce action is filed in the New York Supreme Court are considered marital debts. Private loans, school loans, personal loans, mortgages, lines of credit, credit card debt, and medical debt are all examples of indebtedness. It’s possible that the debt is for the advantage of one spouse rather than the family as a whole.
A couple in New York City can sometimes agree on how to divide their assets and debts. However, each couple should contact with an attorney about the division. If a couple can’t agree on how to divide their assets and debts, the court will consider the length of the marriage, each spouse’s income and assets when they married, whether one spouse needs the marital home, any spousal maintenance award, the liquidity or non-liquidity of the marital property, and each spouse’s likely financial circumstances. In some more complicated cases, it may be necessary to consider whether either spouse’s contributions entitle them to equitable claims on marital property that is not in their name, whether marital property includes an interest in a business or professional practice, whether either spouse wasted marital assets, and whether either spouse encumbered or transferred marital property without just compensation.
To assess whether a debt is marital or separate in character, the court will consider the nature of the debt, the method in which it was incurred, and the source of repayment. For example, if a husband purchases expensive jewelry and lingerie for a woman with whom he is having an extramarital affair, it would be unreasonable to impose this debt on the wife during the divorce proceedings. Similarly, expenditures in flower shops, vacations, or hotel stays bought to conduct the extramarital affair would not be in the best interests of both spouses, and burdening the other spouse with such debts would be inequitable.
Credit card debt is a major issue in divorce. It’s possible that the spouses will differ over whether a debt was incurred for household costs or for one spouse only. Even though credit cards are only in one spouse’s name and only one spouse makes charges, these may be marital debts if the charges are for marital and work-related expenses. The court will make a credibility decision if the spouses testify differently about the charges. Any outstanding financial commitments or debts accrued during a marriage that are not primarily the responsibility of the spouse who incurred them might be deducted from the total marital assets being distributed in New York. As a result, the court will consider the proportion of credit card debt attributable to marital spending versus the proportion attributable to individual expenses. Any marital property that is being divided may be used to offset the marital debt.
The initial meeting with Ingrid Gherman will be focused on the specifics of your situation. Bring all of your legal documents to the consultation so Ms. Gherman can thoroughly analyze the concerns in your case and explain the legal options available to you. Ms. Gherman can assist you with any concerns concerning the division of marital debts. For a consultation, call (212) 941-0767 or use our online form to reach attorney Ingrid Gherman.
What is classed as marital debt?
It is vital to confirm why the debt was incurred in order to determine whether both parties are jointly accountable for the debt or whether one party should be entirely responsible for the debt.
Matrimonial debt on divorce
Whether the debt was taken out in one spouse’s name or as a joint debt, if the debt was undertaken for the benefit of the family (i.e. both spouses have benefited from the loan), then both parties are likely to be jointly accountable for the obligation. It will have to be taken into consideration in any settlement.
Debts incurred to fund building work and improvements to the family house, family vacations, or the family car are examples of “matrimonial” debts.
Individual debt on divorce
If one spouse has accumulated a debt and has received sole benefit from it, the court may view it as one for which the particular spouse should be held liable as part of any financial settlement. As a result, it should be kept separate from the matrimonial assets calculation.
Frivolous expenditure, such as sponsoring expensive hobbies, family vacations, or gambling debts, may be included in these “individual” debts. However, this is an unusual finding, and the difficulties of arguing the specific nature of debts frequently outweigh the benefit of releasing a party from any financial duty to repay them.
A court may also consider whether debts accrued before to or during a marriage should be considered.
In contrast to a partner who accrued big debts during a marriage, which are more likely to be treated as joint debts, if one person brought significant debt to the marriage, they are more likely to be exclusively accountable for these debts.
How do you prove marital debt?
Debt and loans accumulated over the course of a marriage might be regarded a shared concern, similar to items like a marital home or pension, and are often referred to as “marital debt.” If a judge determines that a debt is “marital” in origin, it might be divided equally between the two spouses. In New York, this can mean that spouses going through a divorce will have the option of settling debt obligation before filing for divorce through mediation, collaborative law, or litigation. Alternatively, an agreement can be negotiated and reached while a divorce is pending in court, and the court will have to make a decision if the parties do not reach an agreement before the court date.
Financial responsibilities incurred during a marriage that are not regarded solely the responsibility of a single spouse might be offset against the total marital assets for division under the principles of New York Domestic Relations Law. However, as Mr. Shapiro routinely reminds his clients, if the debt is disputed, there must be some proof that the debts in question were established when paying for marital commitments. Simply defined, the person claiming marital debt must show that the debt was incurred for the benefit of the marriage, such as paying for household costs rather than personal indulgences such as separate trips, gambling, or wasteful shopping sprees.
The courts of New York will be forced to think carefully about how marital assets can be split between spouses in any divorce proceeding including equitable distribution. The split of assets is usually determined by a number of criteria. When it comes to marital debt, debt incurred by the spouses before the divorce action is filed is frequently referred to as “shared” debt. Debts incurred after the divorce is finalized, on the other hand, are considered the entire responsibility of the person who incurred the obligation. However, as Mr. Shapiro informs his clients, the courts in New York have the authority to offset each spouse’s financial commitments when those debts are not solely the fault of the spouse who incurred them. This action, however, requires not only taking into account the several usual criteria involved in fair distribution, such as each party’s income and property, but also the presence of proof. A claimant must establish that the spending was related to the marriage in order for the debt to be termed marital.
Documents are frequently required to demonstrate the debt’s connection to the marriage. Receipts and bills, for example, could be used. The New York Court cannot divide marital debt if the sole reason a couple asks a distribution of responsibility for marital debt is allegations from both parties regarding the use of monies, and the New York Court cannot identify why the money was used. When there is no proof of marital debt, the Court is frequently forced to avoid assigning culpability. Instead, both spouses are often held individually accountable for debts incurred in their own names.
The concerns involving marital debt can be quite difficult to understand, as Mr. Shapiro routinely informs his clients. It’s important to remember that client concerns vary, but in most situations, marital debt will not be awarded in the form of credit for equitable distribution unless the proper proof is provided.
Are you responsible for your spouse debt after separation?
If you and your spouse have divorced and you notice that your partner has a lot of debt, you might wonder if you’re accountable for some of it. The answer is that it is debatable.
When a couple separates in California, the conventional norm is that one spouse is no longer accountable for the other’s debts. However, there is an exception to this rule, and it depends on when and for what the debt was incurred.
Following your divorce from your husband, there are two time periods to be mindful of. The first is the period of time between your separation and the entry of your judgment of dissolution, and the second is the period of time following the entry of your judgment of dissolution. There are three types of indebtedness that a spouse may incur during these two times. There are three types of necessities: common necessities, necessities, and non-necessities. The term “common necessaries” refers to any item that is required to maintain life, such as food, clothing, housing, and medical treatment. Necessaries of life, also known as common necessities of life, are any stuff required to keep your spouse’s status in life afloat. Any items that don’t fit into one of the other two categories are considered non-essential.
If the debt was incurred for the common necessities of life or the necessities of life for your children between the date of separation and the date your judgment of dissolution is filed, you may be held liable for your spouse’s debts. “Debts inc” is defined under section 2623(a).
What is considered debt in a divorce?
As previously stated, the purpose in community property states (like as California) is to split property and obligations between the spouses as evenly as feasible.
Community property states, like equitable distribution states, distinguish between obligations shared by both couples and debts owing solely by one spouse. Debts incurred after the marriage date but before the couple separates are considered “community” debt per the law. Even if only one spouse is responsible for the debt, it is still a 50-50 split.
“Separate” debt refers to debt that arose prior to marriage and was incurred after the couple divorced. So, in the instance of one spouse’s student loan debt incurred prior to the marriage, divorce laws would normally see it as a distinct obligation.
Note that if the value of the community property isn’t adequate to meet the amount of community debt, the law may allow a judge to ignore the equal division of debt rule and divide the obligations between the spouses based on who is financially better positioned to pay them.
Again, rules differ by state, so if this case pertains to you, consult a local family law attorney to discover if your community property state permits this unequal debt allocation.
Is all debt considered marital debt?
Everything that spouses or domestic partners own collectively is referred to as community property. It covers anything you bought or received during your marriage or domestic relationship, including debt, that was not a gift or inheritance.
All profits generated by either spouse or partner (or both of you) during the marriage are considered community property, as is everything purchased with those earnings. By looking at the source of the funds used to purchase the land, you can typically tell if it belongs to the community. The property belongs to the community if the purchase money was acquired during the marriage.
For example, if you paid for a car with money you saved from your paycheck every month during your marriage/partnership, the car belongs to both you and your spouse or domestic partner. Because you earned the money during the marriage/partnership, the savings you have from your paycheck are community property.
All financial commitments (debts) accrued during your marriage or domestic partnership are considered community property. This is true even if just one of you was responsible for the debt, or if a credit card was solely in one spouse’s or partner’s name.
Each spouse or partner in California owns one-half of the community property. In addition, each spouse or partner is liable for half of the debt. The possessions and debts of the community are usually distributed equally.
It’s possible that you own more common property than you know. You might not realize that if your spouse or domestic partner has a pension plan, you have a right to a portion of the money in that plan if any of it was earned during your marriage or domestic relationship. You may possibly owe more money to the community than you know. You may not be aware that your spouse or partner has gone into debt in his or her own name. If the debt was accumulated while you were married or in a domestic partnership, it is also yours.
Quasi-community property is any sort of property acquired by one or both spouses or domestic partners while living in another state that would have been deemed community property if acquired while living in California.
In other words, if you or your spouse or partner lived outside of California during your marriage or partnership and earned money, purchased real estate, or acquired any other type of property that would be considered community property in California, that property is referred to as quasi-community property. It will also be considered as communal property in the event of a divorce or legal separation in California.
For example, suppose you and your spouse spent part of your marriage in New York, where you both worked and bought a car. You’ve relocated to California and are considering getting divorced or legally separated. The earnings from your separate occupations in New York, as well as the car, are quasi-community property since they would have been deemed community property if you had worked and purchased the car in California. As a result, wages and a car will be recognized as common property in a California divorce.
Separate Property
Anything you held before you got married or registered your domestic partnership is considered separate property. Even throughout the marriage or domestic partnership, inheritances and gifts to one spouse or domestic partner are separate property. Rents, earnings, and any other money you earn from your separate property are also yours. Separate property is also separate property if you buy it with separate property.
If you buy a car with money you inherited from a deceased relative, the car is yours even if you acquired it during your marriage or domestic partnership because it was purchased with your separate property.
Anything you acquire after the date of separation, including money you earn, is considered separate property. One of the reasons why the date of separation is so crucial is because of this. It can establish whether a piece of property or a debt belongs to the community or to the individual.
If you own separate property, it is solely yours as long as it is kept that way. Debts, like as credit cards obtained after the date of separation, might also be considered distinct property.
Always check the source of the funds utilized to purchase a product. You can then determine whether the object is separate or community property.
Mixed Community and Separate Property Commingling
Things might be part separate property and part shared property at times. This is referred to as “Because the separate property and common property have become mixed together, the term “commingling” has been coined. It can be difficult to figure out how to split property that is a combination of separate and community property.
One common scenario is when one party owned a home before to the marriage or domestic partnership and then sold it and used the funds to purchase another home after the marriage or domestic partnership was registered. This new house’s down payment would be deemed distinct property (since the money came from selling a house that 1 person owned before the marriage or partnership). The equity (worth) gained from paying down the house loan is communal property if the mortgage payments on the new house are made during the marriage or relationship using either one of your earnings. As a result, the house’s equity has become commingled.
Another scenario is when you or your spouse/partner has a pension or retirement benefit from a job held prior to or during the marriage. Before the marriage or registered domestic partnership, you each made individual contributions to your pension. Contributions made after the date of marriage or domestic partnership registration and before you separated are considered community property. Those donations become separate property after you separate. The exact division of the pension is tricky, and you may need the assistance of a pension specialist to sort it out. If you both have a pension, you may be entitled to preserve your separate pensions in some cases. However, you must be certain of the worth of each pension.
In general, a lawyer’s assistance is required when either spouse or partner has a pension. First and foremost, a pension can be one of your most significant possessions from your marriage or domestic partnership. Second, the regulations governing pensions are quite technical and do not apply to any other type of asset. A pension plan must be well-designed “Before a judge can make a decision on how the pension will be distributed, you must “join” as a party in your divorce case. A qualified domestic relations order, or QDRO, is the name of the court order. If you make a mistake, the consequences could be disastrous. It is worthwhile to hire a lawyer to create the QDRO for you.
If you have a question regarding whether an asset is community, separate, or mixed property, you should see a lawyer. The same is true if you’re not sure how to pay off a debt. For assistance in locating a lawyer, go here.
Do I have to pay bills when I separate from my wife?
When it comes to household and utility bills, the individual whose name appears on the bill is legally responsible for paying it. It’s critical to agree on who will pay the bills once you’ve divorced. If you intend to stay in the family home, it may be prudent to have the bills moved to your name.
What is considered separate property in a marriage?
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are among the states that make up the United States. In these states, a married person’s property is divided into two categories: community property (owned jointly by both spouses) and separate property (owned solely by one spouse). All of the property gained by one or both spouses throughout the marriage is referred to as marital property. Separate property is any property obtained before or after the marriage by the spouses separately (or in some states after divorce). Any gifts or inheritances received by either spouse at any time are considered separate property. These general guidelines are subject to exceptions, which are clearly out in each state’s property laws.
Are assets split 50/50 in divorce?
For people going through a divorce for the first time, property division regulations might be perplexing. Each state has its own set of property division laws. Some follow the equitable distribution concept, which allocates property in a way that is fair to each participant, while others follow the communal property idea. The community property standard is used in California, along with eight other states, to decide how assets are divided between spouses in a divorce.
Equitable distribution states differ from community property states in how they operate. Assets are not always divided equally in an equitable distribution state. Property is usually given to the spouse who earned it, making it more equitable for both spouses. On the other hand, states that recognize community property treat marital property as a single entity. A marriage, according to California law, unites two persons into one legal entity “A group of people.” That is to say, any property (as well as debt) acquired during the marriage is taken into account “Community lands.” Both couples are assumed to contribute equally to the marriage, which means they both possess their marital property.
As a result, regardless of who earned the property or whose name is on the title, each couple has equal ownership. Because California law treats both spouses as one party rather than two, the couple’s marital assets and obligations are split 50/50 unless they can agree on a different arrangement.
Is there such a thing as a financial divorce?
It’s doable, but there are numerous pitfalls to avoid. Yes, getting a paper divorce can save you money, but depending on your unique situation, it might also cost you money. The answer, as with most things in personal finance, is that it depends on a variety of circumstances relating to your family’s resources.
Does your spouse’s debt become yours?
No. Debts incurred before to the marriage remain the unique responsibility of the individual, even in common property jurisdictions. So, if your husband is still paying off school loans, for example, you shouldn’t be concerned that once you marry, you’ll be responsible for their debt.
If you took out a joint credit card before getting married, both partners are responsible for the debt. However, being married does not make you inherit debt; it is signing up for a joint account that makes you responsible for the debt.
Can you sue your spouse for not paying bills?
If an abusive partner (with whom you are not married) fails to repay money you lent him or her, or fails to make credit card or loan payments as promised, you may be able to sue the abuser in small claims court for the money.
What happens to furniture in a divorce?
When a couple is divorced, they must figure out how to separate from one another in a way that allows them to move on with their lives. Although the choice to divorce is deeply personal and emotional, the process also involves a number of other adjustments, including the distribution of your assets. In a divorce, the couple must split their shared property, which includes both large and little items such as savings accounts and furniture.
The division of marital property is a part of the divorce process, and it is mostly focused on the larger assets, such as the home, business interests, investments, savings, and other high-value things. Choosing how to divide up the more personal, smaller items can be just as difficult and time-consuming. The couples are frequently left to discuss and agree on how these items will be distributed. If you can’t come to an agreement, your lawyers and even the court will have to intervene.
If you’re going through a divorce, make sure you know what to expect when it comes to dividing your assets, such as your home and personal belongings. Read on to learn more about the specifics of this procedure.
