People in New Jersey who are considering divorce may wonder how the end of their marriages will affect their financial situation. While dividing assets is a major part of reaching a divorce settlement, it can be equally important to divide debts, including credit card debt. It can be particularly crucial to eliminate joint debts before finalizing the divorce. This can mean paying off joint credit cards with other assets or transferring the debt to cards in the name of only one person.
Since New Jersey is an equitable distribution state, credit card debt that was incurred during the marriage is not presumed to belong equally to both spouses. However, joint credit card debt specifically belongs to both parties. So long as it remains a joint debt, creditors can go after either or both spouses for the full balance. By canceling and eliminating joint debts, both parties can protect themselves from the threat of future credit defaults or bankruptcies by their former partners. It should be noted that creditors can pursue these debts regardless of the spouses’ agreement in the divorce decree as they are not bound by the agreements made during the divorce.
Of course, former spouses could return to court to enforce the divorce decree in case of problems with creditors. However, it can be much easier and more efficient to deal with joint debt before the divorce is finalized and make a clean financial break. Working out an agreement about who will be responsible for which debts can be a key part of asset division negotiations alongside the distribution of retirement funds, bank accounts and real estate.
The financial effects of divorce can linger long after the papers have been finalized. A family law attorney could help divorcing individuals reach a fair agreement on key matters like property division and spousal support.