New York Divorce Laws & Credit Card Debt

By Cindy Chung

A credit card balance may become a significant financial burden when spouses divorce, especially if neither spouse has adequate resources to pay the debt. In New York, the court may assign responsibility for credit card debts as part of a divorce judgment, or the spouses may voluntarily agree on who will pay the debts. In either situation, you should understand the rights established by New York divorce laws and federal debt laws. Accordingly, you may choose to seek professional help.

A credit card balance may become a significant financial burden when spouses divorce, especially if neither spouse has adequate resources to pay the debt. In New York, the court may assign responsibility for credit card debts as part of a divorce judgment, or the spouses may voluntarily agree on who will pay the debts. In either situation, you should understand the rights established by New York divorce laws and federal debt laws. Accordingly, you may choose to seek professional help.

Distribution of Debts in Divorce

New York state divorce laws follow the rule of "equitable distribution" — a process which requires a fair outcome — when a court divides a couple's assets and debts in a divorce. In general, the court must identify marital property, which generally includes assets and liabilities acquired during the couple's marriage. The court must assign marital property equitably between the two spouses. Typically, the court treats credit-card debt acquired during marriage as a marital debt for which both parties are responsible, even if only one spouse accrued the debt.

Divorce is never easy, but we can help. Learn More

Debts Assigned by Agreement

In a New York divorce, spouses can choose to divide their assets and debts voluntarily through a settlement agreement. The agreement must cover all legal issues related to the divorce, including the payment of debts. When one spouse or both spouses have accumulated credit card debts during the marriage, the agreement must assign responsibility for payment of those debts. When a New York court approves a settlement agreement and issues a final judgment in the divorce, the spouse responsible for the credit card debts must make the payments to comply with the court order.

Enforcement of Payments to Joint Accounts

Although a New York court may require payment of a credit card debt as part of a couple's divorce, enforcement may become an issue if an ex-spouse can't afford the payments or simply refuses to pay. If both spouses' names are on the credit card account, federal law allow nonpayment of the debt to affect both spouses' credit reports even if the state divorce judgment specifies that only one of them must pay the joint debt. Accordingly, a divorced cardholder should ask the financial institution to close any joint accounts upon divorce. Closure of joint accounts will help prevent an ex-spouse from accumulating additional debts in both parties' names. If a former spouse refuses to pay a co-signed credit card debt as ordered by the divorce judgment, the other party may need to request enforcement help in state court. New York divorce laws include enforcement actions, such as contempt proceedings, when a former spouse fails to complete acts required by the divorce judgment.

Enforcement of Payments to Individual Accounts

In general, an individual account assigned by court order to one spouse for payment cannot become the other spouse's responsibility after divorce. If a credit card account is held in only one person's name — not co-signed — and that person receives responsibility for the debt in the divorce, the credit card company likely cannot seek repayment from the other party. However, each spouse should carefully review the terms of a settlement agreement or divorce judgment before assuming that he or she isn't liable for a particular debt.

Divorce is never easy, but we can help. Learn More
Divorce Laws on the Distribution of Debt

References

Resources

Related articles

Laws for Breaching Divorce Orders in Oregon

After an Oregon court issues divorce orders or approves a divorce settlement negotiated by the spouses, both parties must follow the established terms. However, a court order does not always guarantee both parties' compliance. An ex-spouse might breach the terms of a divorce by failing to follow court orders related to financial support, child custody and other legal issues. If one party violates a court order, the other party can often seek help with enforcement through the courts.

Can You File Bankruptcy on Bills Obtained in a Divorce Settlement?

Sharing the responsibility for paying bills is a fundamental part of most marriages. If a couple divorces, the parties or the court must determine how to properly divide the marital debt and one or both spouses may be interested in eliminating obligations incurred as part of a divorce settlement. However, federal law places specific limitations on the type of marital debts that can be discharged through bankruptcy.

How Is Debt Split in a Divorce in California?

During a divorce, many couples focus on the division of community assets and often don’t realize that marital debt is also divided when a marriage is dissolved. In California, property obtained during the marriage is considered jointly owned by both spouses and may be subject to division in a divorce settlement. Divorcing spouses are also liable for community debt incurred during the marriage, and the court will determine the most equitable division of these liabilities.

Get Divorced Online

Related articles

Oregon Divorce Law Debts & Assets

Oregon courts issue divorce decrees that dissolve the marriage as well as provide for the terms of the divorce. When ...

Assuming a Debt in Divorce

Though many couples focus their efforts in a divorce on who gets a greater share of the property, the way your debts ...

How Is Marital Debt Divided in a Divorce in Georgia?

Georgia is an equitable distribution state, so one spouse always runs the risk of having more than half the marital ...

What Does the Man Pay for When He Gets a Divorce in Pennsylvania?

Men often have financial concerns when going through divorce. The prospect of legal fees, alimony, child support, ...

Browse by category