In a New Jersey divorce, both spouses are generally responsible for any debts incurred during their marriage. When the court determines the divorce settlement, the judge will include how both marital and separate debts should be handled.

Debt division in New Jersey divorces

New Jersey is an equitable distribution state, which means that in a divorce, property division is done in a way that’s considered fair. When the spouses have joint or marital debts, those are divided based on each party’s contribution to them. Separate debt in a marriage is the responsibility of each individual.

How different debts are handled in divorce

Some debts are incurred by both spouses during the marriage. These are often large liabilities that both own jointly such as mortgage and car loan debt. Both spouses are often named on these loans, which makes them jointly and fully liable. However, during a divorce, if one spouse wants to remain in the marital home, they have options for paying off the mortgage on their own or buying out their spouse and getting a new mortgage loan. In the case of car loan debt, one spouse has the option of keeping the vehicle and paying off the debt.

Credit card debt in one spouse’s name is that person’s responsibility alone. If the other spouse is named as an authorized user, they are not liable. However, if the account is jointly in both spouses’ names, both could be held responsible for paying off the debt, even if only one person racked it up. In that situation, the other spouse could turn to ways to satisfy the portion of credit card debt the court determined they owe. It might mean turning to options like debt consolidation.

Divorcing spouses often have to work together to reach agreements on how to handle marital debt. If the divorce is contentious, however, that might not be an option.