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Michael P. McGuire

How is debt divided in a New Jersey divorce?

When it comes to property division, a lot of the focus is on marital assets. This is understandable. After all, you want to ensure that you’re getting your fair share of the marital estate. But while marital assets can provide you with a certain amount of financial stability post-divorce, that comfort can be derailed by marital debts that have been handed down to you. Therefore, as you proceed with your divorce and your property division, don’t neglect to address marital debts.

How marital debts are divided in New Jersey

Marital debts are handled similarly to marital assets in that they are supposed to be divided in a fair manner. Keep in mind that this doesn’t mean that marital debts have to be divided equally. But to figure out which debts should be divided, you first have to figure out which debts are actually part of the marriage and which fall outside of it.

Determining what constitutes marital debt

In its most basic terms, individually owned debt is debt that is obtained outside of the marriage itself. This means that the debt was acquired before the marriage, or it was accumulated after separation. Even some debts acquired during the marriage may be deemed individually owned. The important determination here is whether the debt was acquired for the benefit of the marriage. This gives a judge a lot of room to determine whether the debt in question was a misuse of funds that should be attributable to one party rather than being divided amongst both of them.

What about vehicles and the family home?

In many marriages, spouses have both of their names on auto loans and mortgages. Here, the spouse that ends up retaining the asset tends to take on its corresponding debt. This may mean assuming the mortgage or refinancing a loan into one person’s name. In fact, that’s often the cleanest way to break away from the debt and ensure that there’s clear expectations about which party is responsible for the debt moving forward.

What about credit card debt?

The division of this debt really depends on the purpose of the debt. If the credit card debt was incurred to support the couple’s lifestyle, then the court may find a way to divide it equally amongst the spouses, such as by looking at their respective incomes and allocating a certain percentage of the debt to each spouse based on their incomes. Remember, though, that if the debt did not benefit the marriage, then it may be deemed individually owned debt and thereby assigned to just one spouse.

Beware of artificial debt

Sometimes, one spouse will incur a lot of debt before proceeding with divorce so as to decrease his or her net worth and in hopes of dividing that debt. This can leave you in a tricky financial position where your access to marital assets is significantly diminished but your likelihood of incurring more debt is increased. These situations need careful investigation so that you can clearly articulate to the court, in a way that is backed up by solid evidence, why your spouse has acted in an inappropriate manner, and you should be awarded what is fair to you.

Competently navigate your property and debt division process

There’s simply too much at stake in your divorce to leave matters like property and debt division to chance. That’s why it’s imperative that you’re diligent and prepared before moving forward with your dissolution. We know that can be stressful to think about, but this isn’t a process that you have to face alone. Instead, competent and experienced legal professionals like those on our team stand ready to assist you so that you can achieve the post-divorce life that you deserve. Call 732-704-7331 or send us an email to get started.