The average American household carries a total debt of about $139,000 according to recent consumer reports. Considering debts from student loans, credit cards, personal loans, and mortgages, this number becomes easier to believe.
When it comes to equitable distribution during divorce proceedings, debt must be fairly divided in a similar fashion to assets including complex assets, retirement assets, family-owned and private businesses, and more. There are, however, some specific considerations that are unique to debt division during a divorce.
The equitable distribution attorneys of Jacobs Berger, LLC have extensive experience helping clients navigate the waters of complex division of debts in a divorce. We take the approach that each case is an opportunity to help our clients build a financially secure foundation for their family’s future. Our legal team takes the time to understand your unique needs and concerns in order to offer dynamic and personalized solutions as we have done for clients in New Jersey towns including Morristown, Randolph, Madison, Morris Township, Tewksbury, Rockaway, and all of Morris County.
Call our office today for a confidential and comprehensive Strategic Planning Session with one of our qualified divorce and family law attorneys regarding your division of assets including any outstanding debt.
Debt and Divorce Lawyers Discuss Marital vs. Individual Debt
New Jersey is an equitable distribution state. What this means for individuals going through a divorce is that all assets and debts which are determined to be marital property are to be divided equitably (fairly) though not necessarily equally. Similar to major purchases, if a debt was accrued during a marriage it will most likely be considered marital debt. This will be the case even if a debt was brought about by the actions of one spouse or the name on the loan or credit card is just one person.
If, however, a debt existed before the time of your marriage, that debt may be considered separate. Additionally, if a debt was incurred by a spouse illegally or deceitfully, that debt may be exempt from the asset division process. An example might be a spouse with a gambling issue taking out a personal loan to pay off gambling losses without informing his or her spouse. Not only did the offending spouse intentionally withhold critical financial information, his/her activities may also have been unlawful by nature.
When is it Best to Pay off Existing Debt Before a Divorce?
Our Morris County debt during divorce attorneys believes that a successful divorce agreement should create a clean break between ex-spouses whenever possible. For this and other reasons, it is typically recommended that divorcing couples pay off any existing debt before their divorce is finalized. If this is infeasible, we will work with clients to add provisions to your divorce agreement which will outline the methods by which the debt must be paid. If these provisions are not adhered to, you have the legal right to indemnify your former spouse.
Another reason to pay off debts when going through a divorce is that lenders and creditors do not abide by the terms of your divorce agreement. Let’s say your divorce agreement places full responsibility of existing debts on your spouse. Once the divorce is finalized, your portion of that debt is relieved as per your agreement. However, the banks, credit companies, lenders, etc. do not care whether or not you are divorced. If your name is on an account and that account is not paid, you will suffer the financial implications of credit score penalties and more.
Credit Card Debt Attorneys Resolve Debt During Divorce
Our Rockaway debt division attorneys understand that every family and individual financial situation is unique. Many divorcing couples simply do not have the liquid funds to pay down their existing debts. Thankfully, there are a handful of alternatives which can be used to make a clean break when it comes to debt and divorce. We will work with you to understand your individual situation and to find a mutually beneficial solution.
Often times marital assets can be used to pay off existing debts. There are also options including splitting credit cards and other debts and placing them into new, separately held accounts. This avoids the issue outlined above where you would potentially be held responsible for the actions of a former spouse. Finally, it may be worth exploring the option of Chapter 7 bankruptcy. Our attorneys will work with your situation to determine and execute the best plan for your individual needs.
Contact our Marital Debt and Divorce Lawyers Today
At Jacobs Berger, our attorneys see the divorce process as a way to amicably and cooperatively resolve any existing debt issues that may have existed in our clients’ marriages. We approach this process as an opportunity to build a new, strong financial foundation for the future. This unique and dynamic method has led to successful resolutions of equitable distribution of assets and of debt for our clients in local New Jersey communities and all of Morris County.
To speak with one of our qualified divorce attorneys today, please contact us online or call our Morristown office by dialing (973) 710-4366 for a confidential and comprehensive Strategic Planning Session regarding your divorce, your division of assets, and your debt.