How Marital Debt is Addressed in Divorce Agreements

The distribution of marital assets is of primary concern during divorce agreements. As debt acquired during a marriage is recognized as marital property in the state of New Jersey, individuals must understand how debt will be factored into the division of assets. If you are undergoing a divorce, Moskowitz Law Group can help explain the role of debt in divorce agreements.

In the state of New Jersey,  distribution of anything acquired during the course of a marriage is subject to division,  including debt. During divorce proceedings, marital assets and debts are divided amongst spouses by the court according to the equitable distribution model. This distribution method calls for a fair division of assets rather than an equal, 50/50 split of marital property and debt. To determine how assets and liabilities will be split according to the equitable distribution model, the court considers a variety of factors pertaining to the marriage.

Factors Used to Determine Distribution of Assets

N.J.S.A § 2A:34-23.1 cites 15 factors used by the courts to determine how to distribute marital property between the parties to a marriage:

• The length of the marriage
• The age and health status of each spouse
• Debts and liabilities of each spouse
• Potential tax consequences of the property distribution
• The standard of living for spouses during marriage
• Each spouse’s ability to earn a living following the divorce
• Any prenuptial or postnuptial agreements
• The value of property each spouse will possess after the divorce
• Whether the spouses helped one another attain educational or professional achievements during the marriage
• Whether one spouse or the other sacrificed their education or career to care for the couple’s joint household or children

Marital debt, like other marital property, will be divided equitably among spouses during divorce agreements according to the factors listed above. The court may also consider any other relevant information that may provide insight into the contributions of each spouse to the marriage. Although fault is generally not considered in New Jersey divorce proceedings, if a spouse misuses marital assets during a marriage, the court may take this into account.

Similarly, if one spouse failed to make considerable contributions to the marriage, an attorney may be able to help argue for more equitable property distribution. Specifically as to marital debt, the court will consider how the debt was sustained, the purpose of the debt, whether the parties both benefited from creation of the debt (such as the charge of the cost of a family vacation) and other factors relating to the analysis referenced above.

Types of Marital Debt

Within a marriage, multiple types of debt will be considered marital property during a divorce. Credit card debt is one example of a debt that will be distributed equitably among spouses in divorce agreements. Subject to an analysis of how the debt accrued, New Jersey generally considers both spouses responsible for credit card debt collected during a marriage.

During proceedings, the court may distribute credit card debt according to which spouse incurred it or benefited from it. A mortgage is another debt that will be divided equitably during divorce proceedings. It is recommended and common for spouses to sell the home acquired during the marriage to pay off marital debt.

If this is not possible, the home will be allocated to one spouse should they buy out the other’s share of the home. It is also possible to continue co-owning a home if selling is not realistic. Debt acquired outside of the marriage is referred to as separate debt.

A common type of separate debt is student loans, which will remain the responsibility of the spouse who incurred it. However, separate debts are still important to consider, as the court will use that information to assign further debt to either spouse in the distribution of marital assets.

Consult With a Moskowitz Divorce Attorney to Determine the Role of Debt in Your Divorce

The distribution of marital property during divorce agreements can be complicated and intimidating. Moskowitz Law Group can help you understand what factors may affect how debt will be assigned to you following a divorce. Contact us to get connected with a divorce attorney to learn more about debt within your divorce agreement.