Til debt do us part
Did you know that ALL debts accumulated during the marriage are subject to equitable distribution at the time of divorce? You may say, well yeah, the mortgage, our home equity loan, I know that. That’s not what I’m referring to. ALL personal debts that are accumulated during the marriage are subject to equitable distribution during divorce.
I bet I got your attention now! That includes the following: 1. Credit card debt; 2. Personal loans, and 3. School loans!
One of the most common reasons for a marriage to end is because the parties disagree over finances. If you’re not married, this is something important for you to think about. Does your spouse have a shopping problem that causes the credit card bills to be maxed out every month? Does your spouse have a habit of simply not paying bills? Even if you don’t know that your spouse is running up debts, New Jersey law says you can be on the hook for half of that debt as well. Now, it's not automatic that you be responsible for one-half. Equitable distribution does not mean equal distribution. The court considers facts such as whether you knew about the debts. However, even if you didn’t, you’d be on the hook for something. What’s the best way to avoid finding yourself in a situation where you are getting divorced and learn at that time your spouse has thousands of dollars of debts? First, try having a conversation. Maybe a yearly financial talk with your spouse. Review both of your credit reports togethers so you both know what your financial statuses are. Second, if the conversation doesn’t work, order a credit report for your spouse. You’re entitled to one free credit report each year but if you need a report more than once per year, you can pay for it. The $50 you’d pay for the extra report will be worth saving you the stress of learning during divorce there’s $30,000 of debts! You could also join Credit Karma and keep track of both of your credit reports that way. Third, take charge of paying the monthly bills. That would keep you in the loop on what debts are accumulating each month and how much they are. The ability to have an open and honest conversation with your spouse about money and debts will help your marriage in the long run!