Debt is an unavoidable part of being an adult, unless you were born with the financial acumen of a hedge fund investor, which is rarely the case. Your personal debt is then added to your student debt, and when you get married you’ll need a house, at least one car, and all the other trappings of a modern life…which results in even more debt.
Managing your debt as a couple is something every married person takes as part of the deal. But what happens if your marriage isn’t working out, and divorce is the only realistic option?
During a divorce you need to be able to not only divide up your familial assets, but also any debts that have been incurred during the term of your marriage. After all, it wouldn’t be fair for either party to shoulder 100% of the debt, especially because it\’s unlikely that they’re solely responsible for its accumulation.
Divorcing couples living in New Jersey are fortunate because it’s a state where “equitable distribution” is part of any divorce proceeding. Equitable division is often mistaken to mean that the total assets and financial liabilities of both parties are divided equally, but what it actually means is that they’re divided in a fair manner.
In an ideal world both parties in a divorce case would agree on the best way to divide their assets and debts, but that’s extremely rare, especially in a contested divorce. One of the most contentious areas of any divorce case is who actually “owns” specific debts, which usually leads to a lot of finger pointing. So, it usually falls to the court to decide how they should be divided, predicated on the fact a marriage in New Jersey is viewed as being an “economic partnership”.
The first step in understanding how the division of debt works in New Jersey is to understand that your overall debts fall into two separate categories: marital and non-marital.
Put simply, this means there are certain debts you accrued before you were married, and others that were only created during your “economic partnership”.
If you take the example of student debt this is most definitely a non-marital debt, because you built this debt up before you were married. Credit card debt, real estate and car loan debt would have been built up during the term of your marriage, so that means it qualifies as marital debt. The courts always draw a very clear distinction between the two, and your feelings on the matter won’t matter in the face of factual evidence.
What happens though if your partner has incurred debts that you had no knowledge of? It’s all too common for a spouse to find out during a divorce proceeding that their husband or wife has been hiding thousands of dollars of credit card debt from them for several years. Unless you co-signed for the debt, then it remains the responsibility of your spouse to pay for it – this is where the equitable division of debt can become absolutely invaluable to the innocent party.
After deliberation and analysis of your assets and liabilities, the court will then decide who is financially responsible for each debt. After that point that debt is then your responsibility to repay, and you are not protected from creditors. This is why one or both parties may be forced to file for bankruptcy after their divorce, because they simply cannot afford to repay their various debts.
Always speak to an experienced New Jersey divorce litigator before going ahead with your divorce. This one move could literally save you tens of thousands of dollars.
It’s an investment in your financial future.