In a divorce, a lot of couples fight about who gets what assets, as they should if they do not feel they are getting their fair share. But many couples do not think about marital debts, and who will be saddled with or burdened by those debts.
Here are some facts about marital debts that you may not consider before your divorce, but which you certainly should consider when determining who will be left responsible for paying what debts from the marriage.
Forget Whose Name is Associated With the Debt
Let us say that a wife takes out a credit card in her name. Legally, the creditor can only pursue her for the debt. The husband cannot be made legally responsible simply by virtue of being married.
Now let us say that this couple divorces. Just because the credit is in the wife’s name does not mean that it is not marital debt because New Jersey is an equitable distribution state.
Family law does not care about whose name the debt is legally under. If the debt was incurred to pay for marital expenses, or if marital funds were used to pay off the debt, the debt could be marital.
That means you should not assume that you are or are not responsible for paying for the debt when it comes to the divorce simply because the account may or may not be in your name.
Who Should be Responsible for the Debt?
That said, it is often a good idea in a divorce to try to make a spouse responsible for paying for any debt that is solely in his or her name if that can be done in a way fair to both spouses. Here is why.
Assume the debt is only in the wife’s name, but in the divorce, the husband agrees that he will be responsible for it. Later, the husband does not pay and the creditor sues the wife.
The creditor does not care that the husband agreed to be liable for the debt in the divorce. The wife is the one who will be sued, and she may have little recourse against the husband—certainly not in civil court, and the fact the husband agreed to pay, is not a defense to any collections lawsuit against the wife by the creditor.
Put another way, if spouse 1 is responsible in the divorce for a debt that spouse 2 legally is liable for, spouse 2 is not legally off the hook, and could end up at the mercy of spouse 1 should spouse 1 opt not to pay.
Do not forget about future debts. This often happens with vehicles. A couple will divide up marital cars between them, but fail to account for the fact that car 1 may be “upside down” (negative equity) by many thousands of dollars. Or, they may not account for the fact that the Husband just had a medical procedure and has not been billed for the services yet.
Make sure your divorce includes all debts—even those that may not be incurred or billed until later on.
Contact our New Jersey Divorce attorneys at The Law Office of Agnes Rybar LLC for help and to make sure that you are properly handling all parts of your New Jersey divorce case.