When couples divorce, one of the most contentious issues is often debt division. Who is responsible for paying off joint debts, and how are they divided? In New Jersey, the courts follow the principles of equitable distribution, which means that debts, like assets, are divided fairly, but not necessarily equally.
Marital debts vs. separate debts
In New Jersey, debts incurred during the marriage are considered marital debts, and both spouses are typically responsible for paying them off. These debts may include credit card balances, mortgages, car loans and other joint financial obligations. On the other hand, separate debts, such as student loans or personal credit card debt incurred before the marriage, are typically the responsibility of the individual who incurred them.
How courts divide debts
When dividing debts, the court considers several factors, including:
- The length of the marriage
- The income and earning capacity of each spouse
- The contribution of each spouse to the acquisition of the debt
- The financial circumstances of each spouse
The court may order one spouse to pay off a debt in full or divide the debt between the spouses. In some cases, the court may also consider the tax implications of debt division.
Credit card debt and other liabilities
Credit card debt and other liabilities, such as personal loans, can be particularly challenging to divide. In New Jersey, the court may consider the following factors when dividing credit card debt:
- Who incurred the debt
- Who benefited from the debt
- The financial circumstances of each spouse
Dividing debts in divorce can be complex and contentious. It’s essential to understand the principles of equitable distribution and how the court divides debts in New Jersey. Working with an experienced divorce attorney can help you protect your rights and interests, and that you receive a fair share of the marital assets and debts.