Remember the game  of hot potato from when you were little?  You would pass around an imaginary hot potato that you would quickly pass on to the next kid.  The person stuck with it when you called “hot potato” was the loser.

This is a similar strategy that people try to employ when it comes to dividing debt.  While you may have enjoyed that hot tub you bought, the vacation, etc., none of them seem so appealing when there is a pile of debt that needs to be divided between divorcing spouses.   While some debt may be caused by one spouse for obvious non-family reasons (i.e., gambling, alcohol), that is the easy pile to pass on and attribute to the spouse who incurred the debt.  But what happens when the bills have piled up over time with both parties having, if not enjoyed, at least utilized, the purchase that caused the debt?

A recent case that came down from our Appellate Division brought this issue to light in an interesting way.  In that case, the Wife argued that the affluent lifestyle she had come to enjoy should continue after the marriage, and, by the way, all of the debt should be the Husband’s responsibility.   After going through the facts, the Court held that the husband couldn’t be held responsible for supporting the wife in a lifestyle that existed on borrowed (not actual)money.

The Court also did not hold the Husband solely responsible for the debt.  The Wife knew about the debt, consented to a refinancing of their house, and benefited from the items they purchased and the lifestyle they led, and therefore she had a responsibility to share in repaying it.

Assets are easy to divide-everyone wants them, but no one wants to be taking money out of this week’s paycheck for yesterday’s fancy dinner.

"Overdue Unpaid Bills on Table with Calculator and Cheque BookEven people in the happiest relationships should consider these things as they go along in life:

  1. Do I have the money to buy this?.  If I don’t, is it worth the debt?   While you may need education, reliable transportation, and a place to live, do you need a boat, Jet Ski, snowmobile, etc.
  2. No matter how delicious that $200 dinner was, are you going to remember it next month when your credit card bill comes?
  3. Life is fickle.  You can lose your job, get sick, and have your relationship end, etc., all on a moment’s notice.  What happens then when you have a pile of receipts and nothing to show for it?  Will you be forced into bankruptcy? Or spend the rest of your days borrowing from Peter to pay Paul?

All of these are things to think about not just when things go bad, but especially during the good times.   Keep in mind that New York does not simply hold the person whose name is on the debt responsible in a divorce.  If it was incurred during the marriage, it is the uphill battle of the person claiming it is not a marital debt to prove it.

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