Dividing property in a divorce is often complicated, but debt can be just as important. Credit cards, mortgages, and loans do not simply disappear when a marriage ends. Courts in New Jersey must decide how to fairly divide these liabilities. The way debt is handled can affect credit scores, financial security, and long-term stability for both spouses.
Debt and Equitable Distribution in New Jersey
New Jersey follows the principle of equitable distribution in divorce. This means that marital assets and debts are divided fairly, though not always equally. Debts accumulated during the marriage are typically considered marital obligations, even if only one spouse’s name is on the account.
Separate debts—those acquired before the marriage or after separation—may not be divided, unless they directly benefited the family. The court reviews the purpose of the debt, who incurred it, and how it was used.
Common Types of Marital Debt
Divorcing couples often face several categories of debt, including:
- Credit card balances: These may be divided based on who used the cards and what the charges were for.
- Mortgages and home equity loans: These debts are usually tied to the marital home, which may be sold or awarded to one spouse.
- Car loans: The spouse keeping the vehicle often assumes responsibility for the loan.
- Personal loans or lines of credit: These may be divided depending on whether the funds benefited both spouses or only one.
- Medical debt: If incurred during the marriage, courts may consider it marital, even if it was for one spouse’s treatment.
Each case is fact-specific, and judges have discretion to divide debts in a way that balances fairness with practicality.
Temporary Orders During Divorce
Debt concerns often arise even before the divorce is final. Courts can issue temporary orders to prevent one spouse from running up additional debt or refusing to pay joint obligations. These orders help maintain stability and protect both parties’ credit until the final judgment is entered.
Temporary orders may:
- Require both spouses to continue making minimum payments on joint credit cards
- Restrict the use of home equity lines or joint accounts
- Ensure mortgage and utility bills are paid to preserve the family residence
These safeguards reduce the risk of financial harm during the divorce process.
The Impact on Credit Scores
While divorce itself does not appear on a credit report, unpaid debts do. Joint accounts remain the responsibility of both spouses until they are paid off or refinanced. If one spouse fails to pay, the missed payment will affect both credit reports.
Protecting credit during divorce involves:
- Closing joint credit card accounts to prevent new charges
- Refinancing mortgages or car loans into the name of the spouse keeping the asset
- Monitoring credit reports to detect errors or unauthorized charges
These steps ensure that future borrowing power is not harmed by a former spouse’s financial behavior.
What Happens if Your Ex-Spouse Defaults?
Even if a court order assigns a debt to one spouse, creditors are not bound by that order. If both names are on a loan or credit card, the creditor can pursue either spouse for payment.
If an ex-spouse defaults, the other may:
- File a motion for enforcement in family court, asking the judge to compel payment
- Seek reimbursement if payments are made on the other spouse’s behalf
- Use wage garnishment or other remedies if the court finds the default intentional
Because creditors pursue the contract, not the divorce judgment, it is critical to restructure accounts during the divorce itself.
Negotiating Debt Division
Couples can negotiate how to handle debts in a settlement agreement. Options may include:
- Trading assets for debts, such as one spouse taking more property while also assuming more liability
- Selling property to pay down debt, reducing the risk of future default
- Splitting balances proportionally, based on income or contributions during the marriage
Mediation often helps spouses reach practical compromises, especially when preserving credit is important for both.
Protecting Yourself During and After Divorce
Practical steps can reduce risk and create financial security:
- Create a complete list of debts. Include account numbers, balances, and whose name is on each.
- Stop joint spending. Close or freeze accounts to prevent new charges.
- Make a payment plan. Decide who will pay what during the divorce process.
- Refinance or transfer balances. Ensure debts follow the spouse responsible for them.
- Keep records. Save copies of payments, agreements, and court orders.
Being proactive protects both credit and peace of mind.
When Legal Guidance Is Necessary
Debt division is not just about numbers—it is about fairness, accountability, and long-term impact. Disputes often arise when one spouse hides debts, refuses to pay, or misuses credit. Skilled legal guidance ensures that debts are fairly classified, properly divided, and enforceable.
The attorneys at Morgenstern & Rochester have decades of experience helping clients navigate complex divorce issues, including the division of marital debt. Their hands-on approach ensures that clients understand their obligations, protect their credit, and secure a fair financial settlement. To schedule a consultation, call (856) 489-6200.
Conclusion
Debt division is a vital part of divorce, carrying long-term consequences for both spouses. New Jersey’s equitable distribution system requires careful review of each obligation, from credit cards to mortgages. With temporary orders, proper negotiation, and protective measures, couples can safeguard their financial futures. Legal support provides the guidance needed to avoid pitfalls and secure fair outcomes.