Numerous married couples in New York have shared debts. They simply accumulate over time in the form of joint credit cards, auto loans and mortgages -- to name a few. Unfortunately, when a couple chooses to divorce, this shared debt can be an issue. While a divorce settlement may name who is responsible to pay back the debt, creditors can still hold both parties responsible.
When going through a divorce, most people are concerned about how assets are to be divided and fail to consider how debts are to be handled. However, debts cannot be ignored. Failing to address shared debts can end up hurting one's personal finances and credit when all is said and done.
Just like assets, shared debts that cannot be paid off before a divorce is finalized will be divided between spouses. When this happens, certain steps may be taken to freeze or cancel joint accounts, so that each party will be held responsible only for the debt he or she is assigned in the divorce. Along with considering cancelling joint accounts and transferring debts to personal accounts, one may want to keep an eye on his or her personal credit report in order to ensure he or she is not being held responsible for an ex-spouse's debts.
Dealing with any sort of shared debt when going through a divorce can be challenging. However, steps can be taken and arrangements can be made so that it is managed appropriately. Divorcing couples in New York with shared debts can seek legal and financial advisory assistance in order to negotiate settlements that each party is not given more than his or her fair share of the debts owed.
Source: nerdwallet.com, "Manage Your Debt for a Smoother Divorce", Shawn Leamon, Dec. 7, 2016