In any New York divorce, separating the marital assets and debts forms a key part of the divorce settlement agreement. Although couples may focus on how to split up the assets, keeping the debts and liabilities in mind is equally important to obtaining post-divorce financial stability.
While you should always consult an experienced Long Island divorce lawyer for specific advice regarding your own divorce, here are three important items to keep in mind when thinking about debt during divorce:
Do you know what you owe?
Find out exactly what debts are held in your name, your spouse’s name, and both names. Make copies of all loan agreements and outstanding loan amounts, and keep these copies in a safe place. The more information you have about what you and your spouse own and what you owe, the better your position when it comes time to negotiate a settlement.
Is your name on the debt?
If a car loan, mortgage, or other debt is held in your name post-divorce, you are legally liable for the debt, even if the terms of your divorce settlement say that your spouse will be making the payments. This is because the loan paperwork is a contract between you and the creditor who supplied the loan – and the creditor is allowed to enforce that agreement. If you’ll be splitting up debts so that your spouse pays certain bills, make sure your spouse’s name is the only one on the paperwork for that debt.
Are you (and your credit score) protected if your spouse doesn’t pay?
If you and your spouse both agree to pay on a marital debt, and your spouse doesn’t pay, you may be forced to make both sets of payments to protect your credit rating. Talk to your attorney about ways to protect your options – such as taking your spouse to court – if this happens.