Dividing Debt During Divorce

A major part of many divorce proceedings for New Jersey spouses is the issue of property division. The equitable distribution of marital assets can be a long and legally complex process, often involving owned real estate, business assets, retirement assets, and much more. What is often forgotten during this process is the division of existing debt. Most American families hold debt in one form or another, and that may be eligible for division as well. Today, our debt and divorce attorney will be discussing the equitable distribution of debt and some available options for divorcing couples.

Union County, NJ Debt and Divorce Attorney Discusses Equitable Distribution of Debt

Within the division of assets process, debt is considered an “asset” (or in this case a liability) to be divided just like any other marital property. Debt division follows the principle of equitable distribution, meaning that debt will be divided based on the contributions of each spouse, and will not necessarily be divided 50/50.

It is important to understand that debt accrued during a divorce will be considered marital property in most cases, regardless of whether or not both spouse’s names appear on the credit card, mortgage, or other financial documentation. Conversely, debts accrued before your marriage was finalized may be considered separately. Even this can be a grey area, as the debt may have grown and been “contributed to” by both parties during your marriage as well, which may lead to the debt being considered marital property.

Another exception to debts being considered during a division of assets are any debts which were accrued illegally or fraudulently. Debts which may otherwise have been considered marital may not be eligible for equitable distribution if any unlawful activity took place. This is of course assuming that the non-responsible spouse was not aware of the unlawful activities in question.

Westfield Debt Division Lawyer Resolves Debt in Divorce Proceedings

There are several alternatives which are available to divorcing couples when it comes to dividing debt. Dependent on the nature and circumstances of your divorce, your Westfield debt division lawyer may recommend one of the following:

  • Paying off debts before divorce – when possible, eliminating debt before your divorce is final is the cleanest, and often most advantageous option for divorcing couples. This prevents complicated financial and legal situations and provides both parties with a clean slate
  • Using marital assets to pay off debts – a branch of the previous option, it may be part of your divorce agreement that you will sell certain marital assets to raise the funds necessary to pay off outstanding debts
  • Reallocating debts into new accounts – the issue with simply saying “you pay half and I’ll pay half” in a divorce agreement is that you are financially responsible for the entire debt, regardless of whether or not you remain married. For this reason, it may be possible to divide the existing debts into two, separately held accounts. This means you will only be responsible for your newly held account, and will not need to worry about payments being made (or not being made) by your ex spouse
  • Declaring Bankruptcy – for some individuals and couples, bankruptcy may be a worthwhile solution to overwhelming debt

Contact a Linden Debt Division Divorce Attorney Today

Divorce and debt division attorney Edward S. Cooper has been assisting clients with the division of their debts and other marital assets for three decades in Union County towns including Linden, Scotch Plains, Westfield, Plainfield, Elizabeth, Union, and across Northern New Jersey. Attorney Cooper provides personalized and experienced legal counsel for many divorce and family law matters including alimonychild supportchild custody, and much more. His extensive experience also extends to the New Jersey Early Settlement Panel, where he focused on mediation and the amicable resolution of countless divorce disputes.

To speak with Attorney Cooper, please contact us online or through our Linden office by calling (908) 481-4625 today for a confidential consultation regarding your division of debt or any other family law concern.