When Are Business Debts Non-Marital?
In New Jersey, business debts are considered non-marital debts if one spouse can show that the business was not operated in good faith. For example, if a wife who is running a business forged her husband's name on credit card applications that were used for business purposes, the husband is not responsible for that debt. Additionally, if a husband borrowed money to start a new business and borrowed the fund's without the consent of his wife, then the wife is not responsible for the debt incurred either by the loan for start up costs, or for any debt incurred by the business.
If the business was successful, this issue of the allocation of debt may never arise. For the most part, disputes over business debts between two divorcing parties arise when the business is showing a negative net worth during the course of the divorce proceedings. Then, it is up to an attorney to show in some way that the business was not operated in good faith, and therefore, one spouse should not be held accountable for the business debts of the other spouse.
Contact Villani & DeLuca, P.C.
If you and your spouse are contemplating divorce and you own a business together or one of you operates a personal business, this issue of business debt may very well arise during your divorce proceedings. It is important that you speak with an attorney about the debt incurred by any marital business and to be upfront regarding whether or not the business has been operated in good faith since its inception. Our law offices can provide you with the guidance and assistance you need when it comes to navigating the issue of business debt in the midst of divorce proceedings. We will work tirelessly to ensure that you are not held accountable for debts that built up due to non-compliance with good faith business practices.