New Jersey Divorce: How Are Joint Debts Handled?

If you and your spouse have debt, your debt won’t simply go away when you get divorced. You will need to address the “ownership” of your debt during the divorce process, and you will need to do so in a way that works for you, your spouse, and the New Jersey courts while also satisfying your joint creditors.

The “Equitable Distribution” of Debt in a New Jersey Divorce

Just like assets, debts are subject to “equitable distribution” during the divorce process. This means that divorcing spouses must divide their debts in a fair manner—though not necessarily in an equal way. To determine what is equitable in a particular set of circumstances, New Jersey law requires consideration of several factors, including:

• The duration of the couple’s marriage
• The spouses’ respective ages and health conditions
• The income or property that each spouse brought into the marriage
• The standard of living established during the marriage
• The spouses’ respective economic circumstances post-divorce

When it comes to dividing debts, divorcing spouses have several options. For example, to equitably distribute their marital debts and assets, spouses may choose to:

• Pay Off Shared Debts with Marital Assets – For couples who can afford it, one option is to pay off one or more of their shared debts during the divorce process.
• Give the Secured Debt to the Spouse Who Takes the Property – Commonly, the spouse who receives an asset that is still being paid for (i.e., the family home) in a divorce will also be completely responsible for the associated secured debt (i.e., the couple’s mortgage).
• Give More Assets to the Spouse Who Takes on More Debt – If one spouse takes on sole responsibility for a shared debt, that spouse may also receive a larger share of the couple’s marital assets.
• Discuss Debts and Financial Support Together – When discussing the distribution of shared debts, divorcing spouses can do so while calculating any necessary financial support obligations.
• Agree to Continue to Pay Off Debts Together – Spouses can also agree to continue paying off shared debts together after the divorce, although this can cause issues if one spouse stops paying.

Dealing with Joint Creditors During the Divorce Process

When distributing shared debts, divorcing spouses must address their creditors’ requirements as well. Just because spouses agree that one of them will take on total responsibility for paying off the mortgage, this does not necessarily mean that their bank will agree to take the other spouse’s name off of the loan. This can be a complicated issue, and it is an issue that divorcing spouses cannot ignore.

Speak with a New Jersey Divorce Lawyer at Helmer, Conley & Kasselman, P.A.

Due to the challenges involved with debt distribution during the divorce process, it is important for both spouses to seek advice from an experienced attorney. If you are thinking about a divorce and would like to learn more about the equitable distribution rules for marital debts and assets, we encourage you to get in touch. To speak with a New Jersey divorce lawyer at Helmer, Conley & Kasselman, P.A. in confidence, call 877-435-6371 or tell us how you would like to be contacted online today.