In any divorce, the division of joint assets and debts is an important consideration for couples. Along with alimony, child custody, and child support, this issue must be addressed during the separation process. Protecting your rights and financial future is crucial during the course of your divorce. To learn more about how joint debts are handled in a New Jersey divorce, continue reading and reach out to a skillful Bergen County property division lawyer today.
What Are Joint Debts?
Joint debts are financial liabilities and obligations that are shared by both spouses. In some cases, regardless of whose name is on the account, both spouses are responsible for a debt simply because it was incurred while they were married. Common examples of joint debts include the following.
- Mortgages
- Credit card balances and debt
- Car loans
- Personal loans
If any of the above debts exist during your divorce, you must find a way to divide the responsibility between you and your spouse.
How Are Joint Debts Handled in a New Jersey Divorce?
Joint debts are considered marital liabilities in the same way that joint assets are considered marital property, and they are handled in the same way. Because New Jersey is an equitable distribution state, joint debts are split up between the couple in a fair and equitable way.
NJ’s equitable distribution law requires that marital assets and debts are divided fairly but not necessarily equally between the parties. In some cases, a fair distribution may be 50/50, but in others, it could be 70/30, 45/55, etc.
In general, joint debts are handled in a way that allows both spouses to walk away from the marriage on reasonably equal footing. The divorce should not detrimentally financially impact one spouse over the other.
Through mediation or private negotiation, the couple can create their own plan for the division of debts. If they can communicate effectively and discuss the reality of their financial situation they may be able to reach an agreement that can be evaluated and approved by a court. Otherwise, the court has the authority to divide both assets and debts as they see fit.
What Factors Are Considered When Distributing Marital Debts?
When determining how to divide joint debts during a divorce, a court will consider a variety of factors. It is crucial that they ensure a fair and equitable split, so the following and more will be taken into account.
- The length of the marriage
- The financial contributions of each spouse to the marriage
- The non-financial contributions of each spouse to the marriage
- Each spouse’s income and earning capacity
- Who incurred the debt and its intended purpose
- Who benefited from the debt
- The outcome of asset division
If the couple shares minor children then the custody and financial responsibilities of each parent can also be taken into consideration when dividing debts. The outcome of property division will vary on a case-by-case basis so it is important that you understand your legal rights and options during your divorce. Contact an experienced attorney today with any questions or concerns.
