How is debt divided in divorce in NY?

Written by Yonatan Levoritz on February 17, 2025

One of the many difficult decisions to be made when ending a marriage, both legally and emotionally, is answering the question: how does debt get divided in divorce? If going through a divorce in New York, one should know how the law takes debts accrued through the marriage. We will break it down into more digestible pieces below, addressing important topics such as marital and separate debt, the division of debt, and why timing is everything when resolving financial disputes.

At The Levoritz Law Firm, we have decades of experience helping couples in New York untangle the financial complexities of divorce. Whether you’re facing questions about shared credit card debts, personal loans, or mortgages, we are here to help you understand your rights and obligations.

What Is Marital and Separate Debt?

According to New York law, the two main categories in which debts can be classified are marital or separate. The line depends on the timing and, among other reasons, the very purpose of incurring the debt.

According to Legal Clarity, debts incurred during the marriage in some states like New York are marital debts, regardless of whose name may be on the account, while debts incurred before or after the marriage are considered separate. Understanding this distinction is important since it will affect liability during divorce negotiations.

Marital Debt

Marital debt refers to any liabilities that were incurred during the marriage for the mutual benefit of both spouses: the mortgage on the family residence, the credit card debt incurred buying food and clothes and supporting living, and loans on family cars.

These debts have usually been divided equitably during divorce; equitably does not always mean equal; however, other factors also have to be considered.

Separate Debt

Separate debt is incurred by each spouse for personal use, either before marriage or after separation. Examples include student loans taken out for education before marriage or credit card debt from personal purchases after separation. It is important to understand these debts in order to manage one’s liabilities within divorce settlements.

How Marital Debt is Divided in NY

New York is an equitable distribution state. Equitable distribution means that rather than a division that is necessarily 50-50, the court will look to various factors in determining what constitutes a fair division of marital assets and debts.

Debt Division Factors

When courts decide on financial responsibilities regarding divorce, they always consider whether the debt was incurred before or during the marriage. Generally, pre-marriage debts remain separate and are still owed by the individual. Debt incurred during a marriage is usually shared and divided regardless of whose name the account is in. Transparency is essential for both parties to resolve the issue of debt in a divorce.

While financial decisions may not be made as a team, working cooperatively can prevent such problems as ruined credit after divorce. Being aware of this difference is crucial when settling and dividing financial responsibilities.

Can Separate Debt Become Marital Debt?

Yes, it can, but only under certain circumstances. For instance, refinancing premarital debts by taking one spouse’s premarital debts and placing them into a joint loan may make the debt marital. Furthermore, paying off individual debts with matrimonial funds, such as paying personal liabilities with joint savings, can blur the line when classifying the debt. Such situations will require the invaluable services of an experienced family lawyer to present a compelling argument on your behalf.

Why the Timing of the Debt is Important

The timing of debt accrual is a critical determinant of liability. Generally, New York courts consider debt incurred after signing separation agreements or before marriage as separate liabilities. For instance, a student loan taken on before the marriage remains an individual responsibility. On the other hand, a personal loan signed in one spouse’s name but used during the marriage might be classified as marital debt. The best way to protect yourself financially in such a divorce is to file proper financial disclosure and create a timeline for the debt.

The Levoritz Law Firm Is Here to Help You

The Levoritz Law Firm understands how one could feel utterly overwhelmed by the financial troubles that can beset one through divorce proceedings. That is where having an experienced legal team counts—from debt problems to rebuilding finances. Our lawyers will see and guide you through the process. Give us a call at (718) 942-4004 to make your appointment, and let us be there for you during this stressful period.