A New Jersey divorce court will consider any assets and debts that you and your spouse acquired during the marriage to be marital property. Debt affects property division in a New Jersey divorce, and it is subject to equitable distribution, just like assets.
It is crucial to have a clear idea of how much debt are you carrying at the time of divorce, including items such as the mortgage on your family house, car loans, credit cards, and taxes. Although both parties are responsible for any debt that either spouse accrued during the marriage, there could be exceptions to this rule. For you to avoid any unpleasant surprises, you need to know your spouse’s exact debt liability and ensure you only receive your reasonable share of debt after a divorce.
Don’t Ignore Your Ex-Spouse’s Debts
Since you share your spouse’s debt liability, it would be detrimental to your finances and interests to ignore your former spouse’s obligations. For instance, if your ex-partner runs up a high credit card debt and defaults on payments, the creditor could go after your financial assets for recovery, even if the credit card was only in the name of your spouse.
Creditors can utilize marital assets to recover any remaining debt balance after unsuccessfully attempting to retrieve those resources from the debtor spouse. You need to consider your financial options after divorce and make sure that any debts from your marriage do not put you at a disadvantage in terms of your credit history.
Fair Allocation of Marital Debt
As debt affects property division, the court will seek to distribute all marital debt equitably between you and the other party. The court will first pursue information and documents from both of you to assess how much of the debt is marital and how much of it might be separate property. The court subtracts the marital debt from the marital assets before dividing the remaining property.
In some cases, the court may not hold both parties responsible for the spousal debt liability of one person. If your former spouse squandered away marital resources on purpose, the court will take this fact into account while dividing the debt. For instance, if your ex-spouse purchased an extraordinarily expensive luxury car on loan to get back at you for seeking a divorce, the family court in New Jersey might decide to hold this spouse alone responsible for the pending car payments.
At the time of property division during a divorce, any separate debts of both parties will not be a part of the marital asset distribution. If your spouse incurred any debt before marriage, and the liability continued at the time of divorce, the court will consider it as a separate debt. One of the most common types of separate debts is student loans.
In some cases, a spouse may have a preexisting business before marriage that required initial loans that are still active in the account books. A New Jersey divorce court judge will consider this separate debt as well when determining how to apportion the marital debt between the two parties.
Protect Your Financial Liability by Hiring an Experienced Divorce Attorney
Are you facing a divorce where your former spouse amassed a copious amount of debt? If so, you need the experience and professional guidance of a knowledgeable divorce attorney. The Law Offices of James C. DeZao, P.A., retains an expert team of attorneys who can assess your financial situation and seek the least financial burden possible on your behalf.
Remember, with us, it’s personal. No matter the case, no matter the client, we are here for you 24/7, 365. We also have bilingual staff available to speak to you. Call us today at 1-833-JIMHELPS or contact us online to schedule your free, confidential phone consultation.