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Sunday, December 7, 2014

Lubrano v. Lubrano - Dealing With Debts in New York Divorce

Disputes over finances are among the No. 1 sources of contention among married couples in New York, and it's one of the top reasons listed for divorce.

Most divorcing couples deal with division of debt on some level, though as we emerge from a deep national recession, more than most are grappling with this issue. That means division of debt in divorce becomes a key point of contention. It's less about who retains assets and more about divvying up the remaining bills. Couples must also be mindful that creditors are not bound by divorce agreements, meaning even if the family court assigns your ex a certain debt, you may still be legally liable for it if he or she doesn't pay timely.

 Still, that divorce agreement can later used to hold the ex in contempt and force him or her to pay you back.

 Our Brooklyn divorce lawyers know that as New York is an equitable distribution state, courts will strive to divide both assets and debt in a way that is considered fair. This does not necessarily mean equal, however. Courts will weigh each spouse's income, future earning potential, role in incurring the debt, etc.

Generally, it doesn't matter whose name is on the account; if the debt was acquired during marriage, it's considered a joint marital debt. However, final determination rests with the court.

In the recent case of Lubrano v. Lubrano, before the Supreme Court of the State of New York, Appellate Division, Second Judicial Department, the family court initially assigned $8,000 worth of consolidated debt to husband. However, appellate division reversed on the grounds wife failed to provide sufficient documentary evidence that the debt consolidation was, in fact, marital debt - meaning it was acquired in the course of the marriage.

Still, the court did find husband responsible for paying $9,000 in support arrears, $150 weekly in continuing support, $50,000 for wife's equity in home loan and another $38,000 in wife's attorney's fees (the last one due primarily to the fact the husband reportedly took numerous actions to delay proceedings). In deciding these matters, the court also took into account the disparity of income between parties (husband made substantially more), the relative merits of each position and also each party's conduct throughout the proceedings.

Although finding husband's actions objectionable, this was not enough to overcome the looming question of whether the $16,000 in consolidated debt was in fact marital debt, and thus, the court declined to make husband one-half responsible for paying it.

This is indicative of the fact that just because a debt exists during the course of the marriage doesn't automatically make it marital debt. An experienced attorney can help separating parties weigh all viable options with regard to debt relief during divorce.

In the best case scenario, both parties would work to pay down all debt prior to divorce. This allows for both sides to make a clean break, and just work on divvying up assets. Of course, we understand this is not always possible. In those situations, divorcing couples should seek the counsel of an experienced lawyer.

If you are contemplating a divorce in New York City, call our offices at (718) 864-2011.

Additional Resources:

Lubrano v. Lubrano, Nov. 19, 2014, Supreme Court of the State of New York, Appellate Division, Second Judicial Department

More Blog Entries:

Uncontested Same-Sex Divorce in New York Easier Than in Other States, Oct. 12, 2014, Brooklyn Divorce Attorney Blog


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