What Happens to Your Debt after a Divorce?By Moskowitz Law Group, LLC |
If you have just gone through a divorce or are currently in the process of obtaining one, your finances are probably one of your biggest concerns. Most American couples owe debt in some form and disbursing these liabilities may be tricky during a divorce. You might be wondering what will happen to your debt after the finalization of your divorce, but with help from a local asset division attorney, you could have a better grasp on your rights and responsibilities.
Community Property vs Common Law Property
Regarding debt post-divorce, each state either abides by the rules of community property or common law property. New Jersey is a common-law property state along with the majority of states in the country. Common law means that even when married, your debt is your sole responsibility. However, debt that is accumulated through expenses with your spouse that benefit the family, such as childcare, food, clothing, your home or household items deemed necessary, are excepted.
Debts that benefit the family are consequently owed by both spouses. The other exception is debt that was signed by both parties, in which case both parties are in charge of repaying this debt. However, debts that are in one spouse’s name remain the responsibility of that spouse alone.
If you and your spouse keep your income separate, each spouse is solely responsible for everything related to your income. If you bought any kind of property on your own, you are solely responsible for this property and any debts associated with it. If you have separate credit cards, you will not be responsible for your spouse’s credit card debt – only your own. That said, if you combined bank accounts with your spouse or bought a property together, you’ll be dealing with shared finances which changes how debt is dealt with during a divorce.
An Attorney Could Help You Handle Debt During a Divorce
During your divorce judgment, the judge will make a decision concerning how each party is responsible for different aspects of the finances and debts. The bottom line is that if you have shared debts with your spouse, the courts will decide how this will be split amongst the two of you. If you keep your finances and debts separate, you may only be responsible for your own debts. To learn more about the debt division process, get in touch with a dedicated attorney as soon as possible.