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2 credit card challenges that arise in many New Jersey divorces

On Behalf of | Jul 21, 2023 | Family Law

Most married couples share their financial resources and their obligations with each other. For example, the average household requires at least one or two credit cards to help balance the household budget and cover unexpected expenses.

Credit cards can cause numerous challenges during the divorce process and after the end of a marriage when spouses begin rebuilding their lives. These are two important issues related to credit cards that people need to consider as they prepare for a divorce in New Jersey.

What constitutes marital debt?

In many cases, any financial obligations taken on during the marriage become part of the marital estate, which means that both spouses have partial responsibility for those debts. However, there could be debts that one spouse feels strongly about not helping to pay. Perhaps one spouse entered the marriage with significant pre-existing debt, or maybe they took on debt as a way to dissipate marital property or in an attempt to conduct an affair. Spouses may find it challenging to simply establish which debts are the responsibility of both spouses and which debts should become the obligation of only one spouse.

How to fairly repay debt

It is common for spouses to have different income levels and personal resources, which means that simply dividing the account balance in half or designating different accounts for each spouse to pay may not be the best approach to property division. Not only do spouses have to consider what each spouse is capable of paying from the pool of marital debts, but they also have to consider the possibility of misconduct in the future. If one spouse has a theoretical responsibility to pay a credit card balance, they might refuse to do so. Sometimes, they may even file for bankruptcy after the divorce.

The creditors denied repayment could then potentially take action against the other spouse. The family court order related to the debt will have little bearing in debt-related civil court proceedings and will not absolve the other spouse of their theoretical financial responsibility. Some spouses find that the best solution involves using joint resources to pay debts in full so that there is no possibility of future financial mishaps following the end of the divorce process.

Recognizing how credit card debt may complicate an upcoming New Jersey divorce might help those hoping to settle matters quickly include thoughtful details in their agreements. Seeking legal guidance is a good starting point.