Can I be held responsible for an ex-spouse's debt after divorce? | Lane & Lane, LLC
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Can I be held responsible for an ex-spouse's debt after divorce?

When a couple decides to end their marriage, both parties will likely be concerned about the complicated process of property division. As part of this process, they will also have to deal with the division of debts. Some New Jersey couples are able to sit down and negotiate disagreements. However, when all communications have broken down, a litigated divorce may be the only option. In that case, it will be up to the court to divide property and debts.

In an equitable distribution state such as New Jersey, the person in whose name a debt is will likely remain responsible to the creditor for payment of it. However, it is typical for judges to try to divide assets and debts fairly. Separate property, each spouse's income potential, respective contributions to the marriage and other relevant factors will be taken into consideration. More debt may be allocated to the spouse who receives more assets.

Sometimes, one spouse may be assigned debts that are in the name of the other spouse. For instance, if a wife is awarded a car that is in the name of the husband, she may also have to make the payments, despite the fact that the loan may be in the name of the husband. However, the lender has no interest in the manner in which the court has allocated debts and can come after the person whose name is on the loan agreement. For this reason, it is important to have an indemnity clause added to the divorce decree as protection against the event of a former spouse defaulting on payments of debts and thereby compromising the loan holder's credit score and more.

A lawyer can also make sure a client is protected against creditor action that may result in wage garnishments, repossessions and more if an ex-spouse fails to make any required payments. Joint business debts can also involve a complicated division process, and professional guidance of an experienced divorce attorney can be invaluable. A lawyer may even suggest alternative methods of dealing with property and debt division such as mediation that may be less time consuming and more cost effective with an added bonus of being less traumatic than litigation.

Source:, "How Debt Is Divided in Divorce", Rachel Blumenfeld, July 22, 2016

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