Many people who are preparing for divorce in New Jersey worry about both their resources and financial obligations. The equitable distribution statute on record in the Garden State requires that the courts fairly split both assets and debts between both spouses in the event of a litigated divorce.
The best solution often requires taking a comprehensive look at both one’s marital resources and debts to divide them in a fair manner. Generally speaking, whatever people acquire during marriage is subject to division during divorce. That rule applies as much to personal debts as it does to income earned by both spouses.
Student loans, credit card balances and other financial obligations are the responsibility of both spouses and likely subject to division in a New Jersey divorce. However, there are three types of debts that people can sometimes exclude from property division proceedings in a New Jersey divorce. The following debts may ultimately be the responsibility of just one spouse post-divorce.
Debt from before the marriage
Both assets acquired prior to marriage and debts taken on before a wedding are usually separate property. Spouses don’t share those resources or debts unless they have an agreement to do so. Determining how much money someone owed prior to marriage could help one spouse exclude the debts of the other from the pool of marital property in their divorce.
Debts taken on maliciously
The courts will consider claims of dissipation during a New Jersey divorce. Dissipation is the wasteful destruction of marital property. Usually, dissipation involve someone intentionally taking on debt as a way to negatively impact the marital estate right before a divorce. The courts may also consider debts taken on while conducting affairs to be dissipation of marital assets as well.
Debts hidden from one spouse by the other
Technically, spouses should share not just their resources but also information about their finances with one another. Some people engage in financial infidelity while married. They open up secret credit cards and go on hidden shopping sprees. One spouse may learn that the other racked up thousands of dollars in debt that they never knew existed during the discovery process of a divorcee. Evidence that someone intentionally lied about or hid debts during the marriage could lead to the courts excluding some of those balances from the pool of marital property during the New Jersey divorce.
Recognizing which debts are subject to division and which ones are not can help spouses to plan more effectively for property division negotiations or litigation. Seeking informed legal guidance in this regard is always an option.