Most people in New Jersey have probably heard virtual horror stories about how someone they knew lost their home, their treasured collection of some product, or another favorite item when they got divorced. It is true that couples must divide their assets and belongings when their marriage comes to an end. However, people should not only focus on the items that have some value, but also on the money that a couple may owe. Debts as well as assets are subject to division in a divorce settlement.
As explained by Clearpoint, a divorcing couple will want to carefully identify what debt is considered shared by both spouses and what debt is considered the sole property and responsibility of one spouse only. This may be determined by the date the debt was incurred. A debt taken on by one person before the couple was married, for example, might be deemed separate property. A joint mortgage used to buy a couple’s family home, on the other hand, may be more likely to be deemed marital property.
The date on which a couple officially separated may be another means of determining what debt is separate versus shared, according to SoFi. This makes the legal date of separation a critical element in a divorce proceeding.
Couples should make every effort to eliminate all joint debt before their divorce is finalized as this is the only way to truly avoid future issues. A divorce agreement may say one person should make mortgage payments but if that person fails to do so, the bank could still request payment from the other person if their name remains on the loan.