Unfortunately, statistics show that anywhere between 40% to 50% of marriages end in divorce in the U.S. Not only do assets and property get divided in a divorce, but debts do too.
The division of debts pursuant to a divorce can be tricky. Both Pennsylvania and New Jersey are equitable distribution states. You may want to apprise yourself of what that means to you and how that may affect what happens to your debts when you divorce.
How equitable distribution laws affect debt division
Equitable distribution states work differently from community property states. Judges tend to divide assets fairly instead of right down the middle in states like these.
In equitable distribution states, debts generally become the obligation of the spouse who took out the debt instead of becoming the responsibility of both of them. If both spouses incur the debt, though, then it’s likely that a judge will require both spouses to pay it back.
Do creditors recognize property division laws?
In an article we wrote last year here on our blog, we suggested that you must be vigilant about credit. We noted this because, when it comes to banks, loan contracts and credit card agreements, these financial institutions only concern themselves with whose name the debt belongs.
Oftentimes, these original financial agreements supersede any divorce decree, putting former spouses in a precarious position when judges order a husband or wife to pay a portion of a debt taken out in the other’s name.
One option you or your spouse may want to pursue if a judge has ordered one of you to pay the other’s debts and your husband or wife doesn’t follow through with their obligation to do so is to petition the court to enforce the order. Your credit may suffer if you leave debts unpaid while you wait on this process to unfold, though. You may want to work out alternate arrangements with your creditor to avoid any confusion concerning responsibility down the road.
If you are going through a divorce you or your spouse have debts, you may want to consult with an attorney. They can go over any options you may have to ensure that your credit score doesn’t suffer because your marriage came to an end.