Assets aren’t the only thing that may need to be distributed between two parties when a divorce takes place. Some couples need to think about distributing their debts too – particularly when there is a dispute about whether the couple agreed to take on those financial commitments together or not. In order to prove to the courts of New York and Long Island that a debt should be split, parties must provide some crucial information. Most commonly, the courts will require some evidence that the debt was incurred either for the benefit of the other party, the household, or with the other party’s permission. This is a way that something may be considered marital debt, rather than just “individual” debt.
In most instances the debt that exists at the time of filing the divorce will be open to consideration by the courts. Usually, any debts that are taken on after the divorce case is filed won’t have any traction in the case. However, I have found some exceptions to this rule. For instance, in the case of G.T. v. A.T., 43 Misc. 3d 500, 501, 980 N.Y.S.2d 255, 256, the court was prepared to consider any debt incurred when the divorce was ongoing. However, the court ended up ruling that it was not going to distribute the debt that was incurred during the pendency of the divorce, simply because neither side was able to show evidence that the debt was made with the other’s permission.
In the case above, the plaintiff had a discover card in their name and a Visa and Mastercard in the name of the defendant. The two parties had accrued debt on all of the cards during the pendency of the case. However, as no evidence was available to suggest that the debt was incurred for the benefit of the other spouse, or with the other spouse’s permission, that debt was not be treated as marital debt. My experience is that if post filing expenses or debt is going to be an issue that the parties would want to attempt to get a Pendente Lite Order from the court. This is an order that provides for payments to be made for support and expenses while the divorce is ongoing. Continue reading