The Impact of Pre-Marital Debt on Divorce Settlements: Separate vs. Marital Liabilities

By Michael DiFalco

There are several important matters separating couples must face during their divorce proceedings, one of the most significant being debt division. While many divorcing spouses are aware of the importance of property division, debt distribution is often just as substantial, especially when spouses have extensive debt.

Navigating debt division can be a particularly challenging and stressful process. But fortunately, it isn’t something you have to handle alone. An experienced divorce attorney can provide quality representation throughout the divorce process and work diligently to reach the best possible outcome on your behalf. 

How New York Handles Debt Division in a Divorce

First and foremost, it’s important to understand how New York law dictates property and debt division.

New York is an equitable distribution state, which means property and debt are divided in a manner that is fair to both parties. Unlike community property states, however, property and debt are not divided in an even 50/50 split. The exact division will depend on the circumstances of the case. 

Separate vs. Marital Debt

To properly distribute debt in a divorce, it is first necessary to distinguish between its two forms: separate and marital debt.

Marital debt is that which is incurred by spouses during their marriage, whether together or individually. Common examples of marital debt include the following:

Marital debt is subject to distribution between spouses, which means they share liability for repayment of these debts, even after they divorce. 

Separate debt, on the other hand (which is also referred to as pre-marital debt), is that which is incurred by one spouse prior to entering the marriage. Separate debt can include student loans and medical bills. And unlike marital debt, it stays with the spouse it belongs to, meaning couples do not share liability for repayment of such debt. 

Does separate debt impact a divorce settlement?

Because separate debt is not subject to division in a divorce, it does not typically impact settlements. Spouses do not share liability for repayment of these debts, as only the spouse that incurred the pre-marital debt is left with the responsibility alone.

Dividing Marital Debt

Spouses may decide how to divide their marital debt in a way that works for both parties. However, if an agreement cannot be reached, the court can intervene and assist with making determinations on how to do so

When the court is left to decide how to divide marital debt, they must consider several factors, such as:

  • Each spouse’s income
  • The amount of marital assets
  • How much marital debt the spouses have incurred
  • How and why spouses acquired the debt
  • Whether one or both spouses benefit from the debt
  • Which spouse can pay off the debt, if not both

Paying off a debt can involve one spouse taking over responsibility for the debt entirely or both spouses continuing to share liability until the debt is paid in full. 

In any case, distributing debt can be especially difficult, and the decisions made during a divorce can have long-term effects on each spouse’s finances. Therefore, it’s important to keep a level head and speak with a reliable divorce attorney before making any major decisions.

Discuss Debt Division With a Skilled Divorce Attorney

When you have concerns about your marital debt and liabilities, do not wait to discuss your situation with a knowledgeable divorce attorney. A lawyer can leverage their skills and resources to help resolve your debt distribution matters properly and efficiently and reach a favorable result in your case. The family law office of Aiello & DiFalco, LLP serves clients throughout Garden City, Nassau County, Long Island, and Queens. Contact us today to get started on your case.

About the Author
I am a partner at Aiello & DiFalco LLP, and my priority for my clients is to guide them through an arduous court case to provide them with the opportunity to write the next chapter in their life. I tailor my approach to each client’s priorities and positions, and to the extent that matters can be predicted, I will always provide a realistic perspective of how the law could be applied to the particular facts and circumstances of a case. Since I thrive on helping people and solving problems, I bring an optimistic and positive approach to practicing in a very difficult area of law. With more than a decade of experience handling hundreds of cases, I have the ability to get results on the issues my clients view as priorities. When cases or certain issues cannot be settled, I have a solid record of success at trials, hearings, and on appeals. Feel free to contact me for a free initial consultation, I am always available to help.