Marital property refers to any property acquired by either spouse during the course of a marriage. Along with obvious items such as houses, cars, and bank accounts, marital properties also include stocks and bonds, life insurance policies and retirement accounts. In addition, martial properties include debts in the forms of mortgages, car loans, taxes, and credit card balances, just to name a few. Even personal loans from family members can be considered marital debts, even if the money was only borrowed by one spouse. In short, if the debt was incurred for the benefit of the marital household, or both spouses benefited in some way from the borrowed funds, the debt is eligible for division in the event of a divorce.
Because New Jersey is an equitable distribution state, all martial properties must be divided as fairly as possible. Ideally, this would mean a 50/50 distribution, but that typically doesn't work out with many types of properties. Furthermore, circumstances within the marriage may necessitate one spouse taking on the bigger portion of the property, or being awarded certain properties in full. With credit cards, for example, debts on joint cards are typically split 50/50. However, splitting debts on cards that are in one spouses' name, but are used by both spouses, is much more complicated. In this case, the court will have to evaluate each spouse's portion of the debt in order to see how it should be split. Other factors, such as each party's income level and their ability to pay back the debt, may also be considered.
It's important to note that a debt is not automatically considered martial property just because it was acquired during the marriage. Remember — marital debts must have been incurred for the benefit of both spouses. Thus, a loan that was taken out to cover one spouse's gambling debts would most likely be considered a non-marital debt. In general, any debt that was not incurred for the benefit of the marriage, or was incurred due to one spouse's misuse of the marital funds would be classified as a non-martial debt. This means that the spouse who didn't benefit from the debt shouldn't have to pay for it once the divorce is finalized, but this is not guaranteed. Even if your divorce judgment orders your spouse to pay back the debts, your lenders can still come after you if your spouse defaults on the loan. This is why it's important to work with an attorney during your divorce. An experienced family law attorney can help you draft an indemnification agreement, which allows you to demand payment from your spouse if he or she defaults on a loan. It may also be in your best interest to sell some of your marital assets in order settle your debts before the divorce is finalized. To explore all the available options for settling your marital debts, please speak with family law attorneys of Villani & DeLuca, P.C.