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Essential Elements of Dividing Debt in a New Jersey Marriage Dissolution

Marital debt is divided using the equitable division standard. There are some essential elements that are taken into consideration when it comes to dividing debt in a New Jersey marriage dissolution proceeding.

Definition of Equitable Division of Property

Equitable distribution is a legal concept that applies to the division of assets and liabilities in a New Jersey divorce. It means that marital property will be divided fairly, but not necessarily equally, between the spouses. Factors that may be considered, include the length of the marriage, the income and earning potential of each spouse, and the standard of living established during the marriage. The ultimate goal is to ensure that each spouse receives a fair share of the marital property, taking into account all relevant factors.

Identify All Debts Incurred During the Marriage

At the outset, it is crucial to identify all the debts that were accumulated during the marriage. This includes debts such as mortgages, car loans, credit card debts, and any other debts that were incurred during the marriage. It is important to be thorough in this step to ensure that all financial obligations are accounted for when dealing with debt during a New Jersey marriage dissolution proceeding.

Determine Whether Each Debt is Marital or Separate

The next step associated with dealing with debt during a New Jersey divorce case is to determine whether a debt is marital or separate. Marital debts are those that were incurred during the marriage and are considered to be joint debts of the couple. Separate debts, on the other hand, are those that were incurred by only one spouse and are not considered to be joint debts. This step is important because marital debts will be divided between the spouses, while separate debts will not.

Determine the Current Balance and Interest Rate of Each Debt

Once you have identified the marital and separate debts, you will need to determine the current balance and interest rate of each debt. This will help you to determine the total amount of debt that needs to be divided between the spouses. It is important to get the most up-to-date information on the debts to ensure that the division is fair.

Determine Which Party is Responsible for Each Debt

After you have determined the total amount of debt, you will need to determine which party is responsible for each debt. This will depend on who incurred the debt and who benefited from it. For example, if one spouse used a credit card to pay for personal expenses, that spouse may be responsible for that debt.

Consider Cach Party's Financial Situation

In order to divide the debt in a fair and equitable manner, you will need to consider each party's financial situation. This includes their income, assets, and any other financial obligations they may have. This step is important to ensure that each party is able to take on a fair share of the debt.

Consider Each Party's Contribution to the Debt

You will also need to consider each party's contribution to financial obligations when addressing debt in a New Jersey marriage dissolution case. This includes who made the payments on the debt, who benefited from the debt, and any other factors that may be relevant. This step is important to ensure that each party is taking responsibility for debt in an appropriate manner.

Consider Each Party's Future Earning Potential

Another important factor to consider when dividing the debt is each party's future earning potential. This can help you to determine how much each party should be responsible for paying in the future. For example, if one spouse has a higher earning potential, they may be responsible for a larger share of the debt.

Consider the Tax Consequences of Dividing Debt

Dividing the debt can have tax consequences, so it is important to consider these when developing a plan for dividing the debt. This can help you to avoid any unexpected tax liabilities in the future. For example, if one spouse takes on a larger share of the debt, they may be able to claim a larger tax deduction.

Develop a Plan for Dividing the Debt That is Equitable and Feasible for Both Parties

Finally, you will need to develop a plan for dividing the debt that is equitable and feasible for both parties. This may involve dividing the debt equally, taking into account each party's financial situation, or some other method that is fair and reasonable for both parties. It is important to work together to develop a plan that both parties can agree to enter into during a New Jersey marriage dissolution case. If are considering filing for a New Jersey divorce, call (201) 887-0461 for a free consultation.

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