The focus of New York divorce settlements is often on assets such as the house or the pension. However it is equally important to consider how to divide up any debt. The NY net worth statement lists both debts and assets but deciding who is responsible for the debts, especially student loans, is complicated.
Premarital debt is easy: it belongs to the person who incurred it. The spouse does not suddenly become responsible for half of it. This can be an important consideration when calculating support. The owing spouse may find supporting the debt payments more difficult on a single income than it was on a dual income. It may be advantageous to negotiate for higher support payments at the cost of giving up illiquid assets like the house in order to be able to avoid defaulting on the loan.
Premarital debt secured while the couple is living together is typically treated the same: it belongs to the person who incurs it. A court wouldn’t expect your college roommate to pay your student loan, whether you are sleeping together or not.
Marital debt is more complicated. Most debts, such as a mortgage or car loan, are considered marital and therefore shared. The reasoning is that the item purchased by the debt benefited both spouses. However education debt benefits only the person who got the education and will now presumably earn more money. For this reason courts typically rule that education debt belongs solely to the one who incurred them even if secured after marriage.
On the other hand, sometimes debt is simply divided down the middle and awarded equally to both spouses.
In New York the situation is a little more complicated, since state law considers advanced degrees to be marital assets. Not only does the degree holder have to pay the debt but may have to compensate the spouse for supporting the education. This could be paid for in increased support payments or in lopsided asset division.
EzSupport-NY is a valuable tool in divorce settlement negotiations. This specialized NY matrimonial law software by Easysoft Legal Software makes it easy for family law attorneys to list all assets and debts in a marriage, indicate which are to be distributed, and divide them in any way desired. Attorneys can experiment with different settlements to find the one that is fairest to both parties.
Try EzSupport-NY to find out how it simplifies the completion of the NY Statement of Net Worth as well as assisting in property division and support calculations.