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What Happens to Joint Debts in a Divorce?
When you decide to end your marriage, it’s important to understand that you are still responsible for any debt in your name. If you have joint debts, you will need to address them. Understanding how these shared obligations are handled and their implications in a divorce is vital to ensuring your rights are safeguarded. Please continue reading to learn how a determined Ocean County Property Division Attorney can help manage joint debts effectively and protect your financial interests throughout divorce proceedings.
Is New Jersey an Equitable Distribution State?
First, joint debt refers to any financial obligation that two or more parties share and are legally responsible for repaying. This may include credit card debt, car loans, mortgages, medical bills, household bills, and even certain student loans.
New Jersey is an equitable distribution state, which means that the court will divide marital property fairly, but not necessarily in a 50/50 split in the event of divorce. It’s important to understand that marital property is considered any asset or debt acquired during the marriage, even if it’s only in one spouse’s name. Therefore, debts that are incurred during marriage are considered joint debts and are the responsibility of both spouses.
How Are Joint Debts Handled During Divorce Proceedings?
When determining a fair distribution of assets, the court will examine a variety of factors including the needs of each party, the length of the marriage, their financial circumstances, the standard of living, each spouse’s age and health, and any contributions made to the other spouse’s earning power. The primary goal of equitable distribution is to ensure that the termination of the marriage doesn’t leave one spouse financially destitute. Depending on who incurred the debt, the amount owed, who benefited the most, and who can pay the court will evaluate each party’s financial circumstances to determine who should bear the responsibility moving forward.
Generally, you won’t be held accountable for debt your spouse has incurred before the marriage. However, the only exception is if you are named a joint account holder after the marriage. Under these circumstances, you will be accepting ownership of the debt, meaning you can be held responsible for its repayment.
Nevertheless, spouses can negotiate how to divide debt as part of a settlement agreement. You may decide that one spouse should take on a larger portion of the debt based on their income or contributions to the debt. You can also choose to take on a larger portion of debt in exchange for additional property or assets or determine that a loan that only one of them used should fall to that party.
As you can see, there are various ways in which you can handle joint debts during a divorce. If you need quality legal support from an experienced property division attorney, contact the Law Office of Sarina Gianna, LLC, to discuss your legal options.