If you and your spouse are in the process of getting a divorce, then you are likely well aware that spousal support, child support, and the equitable distribution of marital property must be resolved. However, people do not always consider marital debt, and the impact it can have on a divorce settlement. New Jersey is an equitable distribution state, which means that marital property, and any debt accumulated over the course of the marriage, is divided in a manner that is fair. The process of dividing a couple’s finances can be complicated, particularly when tensions are running high, or one spouse attempts to hide assets or debts from the other spouse. A skilled divorce lawyer will walk you through every step of the divorce process, address all of your questions and concerns regarding marital debt, and negotiate the best possible settlement outcome.
What Is the Difference Between Marital Debt and Non-Marital Debt?
Marital debt is any debt that is incurred from the moment you and your spouse are married to the date that your divorce agreement is filed. Both parties are generally liable for the payment of these debts, which include things such as mortgages, certain credit card debt, loans and court-ordered judgments. Keep in mind that even if your spouse accumulated consumer debt while you were separated, this is still considered marital debt. A skilled divorce lawyer can discuss your options if substantial debt was incurred without your knowledge.
Non-marital debt is debt that you or your spouse accumulated prior to the marriage, or after the divorce is filed. For example, if the house you live in was purchased by your spouse before you got married, the mortgage on that house is generally considered a non-marital debt. In addition, you will not be financially responsible for any car payments, student loans or other debts that were taken out prior to your marriage.
What Are the Most Common Examples of Marital Debt?
The following are examples of types of marital debt that are subject to the equitable division of property:
- Joint credit card debt: Both spouses are responsible for debt that has accumulated on a credit card that is in both spouse’s names.
- Mortgage debt: Assuming the home was purchased after the couple was married, and the mortgage is in both spouse’s names, both parties will be responsible for the remaining debt.
- Auto loan debt: Oftentimes, one spouse will keep the car and take over the payments. However, if one spouse does not make payments, and the other spouse’s name is on the loan, they will be responsible for late fees, default or collection costs.
What Is the Best Way to Handle Debt During a Divorce?
Ideally, you and your spouse should make every effort to eliminate as much debt as possible, either before or during the divorce so that the divorce settlement is not negatively impacted by the existing marital debt. Your credit score may be impacted if your economic situation changes. Any existing debt that you did not pay off during the divorce could become even harder to pay off. If your spouse declares bankruptcy after the divorce, their debt can be extinguished. However, you will likely still be contractually obligated to pay your share of the debt. If you are unable to pay off all debt, you can ensure that the terms of your divorce agreement specify who is responsible for what debt. A dedicated divorce lawyer will assist you with this process, and guide you through every step of the divorce process.
Tewksbury Divorce Lawyers at Tune Law Group, LLC Works with Clients to Negotiate the Best Possible Settlement Outcome.
If you are going through a divorce, and you have questions or concerns about how marital debt is handled in the divorce process, you are urged to contact the Tewksbury divorce lawyers at Tune Law Group, LLC as soon as possible. We will review all marital assets and debts and negotiate an optimal settlement. To schedule an initial consultation, call us today at 908-434-1061 or contact us online. Our office is located in Whitehouse Station, New Jersey, where we serve clients in, but not limited, to Tewksbury, Hunterdon County, Monmouth County, Morris County, and Warren County.