A divorce settlement or court order in New Jersey will address all financial matters between the two spouses. This includes both assets and debt. You may end up having to pay back debt that was incurred during the marriage under many circumstances. The key is to protect your own financial interest, and you can do so with the help of a Mount Laurel divorce lawyer.

How New Jersey Courts May Address Debt in a Divorce

New Jersey follows principles of “equitable distribution” when it comes to both marital assets and debts. So long as assets or debts were acquired during the marriage, they are divided between the two spouses based on a set of standards applied by New Jersey law. Accordingly, you could end up with a financial situation that may be different from the one you expected because of your responsibility for the debt.

A court would apply equitable distribution to debts in the same exact way that they would consider these factors in relation to assets. Some factors that could affect how debt is divided include the following:

  • Whether one spouse was the one who primarily benefited from the credit.
  • Which spouse controlled the spending, and whether the debt was agreed to by both.
  • Each spouse’s assets and earning capacity going forward.
  • The duration of the marriage.
  • Any financial misconduct by one of the spouses.

When Debt May Be the Responsibility of Both Spouses

A court is more likely to view a debt as marital in nature when the proceeds of the credit benefited the marriage. There are legitimate reasons why spouses would jointly need to borrow money, including:

  • Joint credit cards used for household expenses.
  • Mortgages and home equity loans on marital property.
  • Auto loans for family vehicles.
  • Medical debt for spouses or children.

However, the end result could be that one spouse ends up assuming responsibility for the debt if they retain title to the property after the marriage ends. For example, one spouse could end up with a car when both of their names appear on the car loan. The spouse who retains the car would be the one who is responsible for the debt, and the other would be taken off the loan. Nonetheless, the equity in a car or property would be subject to division between the spouses in a divorce settlement.

Separate Debts in a New Jersey Divorce

Separate debts may have different treatment under New Jersey law. The spouse who incurred the debt would be responsible for paying it. However, debt that was incurred during the marriage for marital purposes is typically treated as a joint obligation of the two spouses. Nevertheless, a spouse may be solely responsible for paying the debt when it was incurred for only their own purposes. For example, that could be considered separate under the following circumstances:

  • Credit card debt incurred to purchase personal items.
  • Expenses related to an extramarital affair.
  • Debt that was taken on after the date of separation.
  • Money owed pertaining to one spouse’s business.
  • Loans that were taken out by one spouse without the knowledge or consent of the other.

Student loan debt does not have an automatic and easy answer. A court would look at the circumstances behind the debt to determine whether one or both spouses must pay it. In some cases, if the debt led to circumstances that greatly increased the amount of marital assets, both spouses may be responsible for it.

Getting help from an experienced divorce lawyer is a must because you do not want to be saddled with debt that you cannot pay. Both assets and debts are part of your divorce strategy that you must have before you negotiate any settlement.

Contact our Mount Laurel Divorce Lawyers at Burnham Douglas if You Have Questions Regarding the Separation of Debit During Your Divorce

Our Mount Laurel divorce lawyers at Burnham Douglas can work to achieve the best resolution for you, whether it is through a settlement or litigation. To schedule a free consultation, contact us online or call today at 856-751-5505. With office locations in Marlton and Northfield, New Jersey, we proudly serve clients in the surrounding areas.