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Division of debt important in a divorce settlement

On Behalf of | Jan 6, 2021 | Divorce

When a couple decides to end their marriage, they have more to figure out than who gets what assets. In New Jersey, couples who are in the throes of divorce also have to figure out how the debts will be settled during the property division process. For married couples, most assets like vehicles are in both names as well as financed in both names.

When each person owns the vehicle, it means that both are also responsible for any payments being made on it. When it comes to property division, it’s usual for each person to keep the vehicle he or she is currently driving in which case, he or she will be responsible for any loans against the vehicle. But what couples should know is that the lender doesn’t care who makes the payments, as long as they are made and if the vehicles are in both names, both individuals may be responsible for repayment. Refinancing might be an option to have one spouse’s name removed from the loan and title.

Another sticky situation is with credit cards in both people’s names. If the credit card is held jointly, the credit card company will hold both people responsible for repayment no matter whether the divorce decree states that one person should pay the account balance. Often, a lawyer will suggest closing joint accounts and transferring a balance to an individual account. Also, if a card is in the name of one spouse with the other listed as an authorized user, the authorized user should be removed from the account.

There are other debts for which both people may be responsible. When a New Jersey couple is ironing out their property division settlement during divorce, who gets what debt may impact each person financially. If one person is supposed to pay a bill and doesn’t, the other will be on the hook which can create a serious financial problem, so it is crucial to obtain independent legal advice on the division of debts.