What Happens to Our Property and Debt if We Get Divorced?
Divorce can be emotionally and financially complicated, and one of the biggest concerns spouses face is: what happens to our property and our debt? In New Jersey, courts do not simply split everything 50/50. Instead, they apply a doctrine called equitable distribution, balancing fairness with reality. As you plan your next steps, it’s vital to understand how assets and liabilities are divided, what qualifies as marital versus separate, and how debts are allocated.
Equitable Distribution: Fair, Not Always Equal
New Jersey is an equitable distribution state. That means the court divides property in a way that is fair under the circumstances, not necessarily equal.
The process typically involves three stages:
- Identify what assets and debts are subject to division (the “marital estate”)
- Value those assets and debts (often via appraisals or financial experts)
- Allocate the assets and debts equitably, considering a series of statutory factors.
These factors include the length of the marriage, each spouse’s income and earning capacity, contributions to marital property (including homemaking or childcare), health, age, tax consequences, and debts, among others.
What’s Marital vs. Separate Property?
Not all your assets and debts get thrown into the “pot” for division.
Marital property and debts generally include everything acquired during the marriage, regardless of which spouse’s name is on title, assuming it wasn’t excluded by agreement or other exception. This may encompass:
- The marital home and real estate
- Bank accounts, investments, retirement contributions made during marriage
- Vehicles, furniture, and personal property
- Debts incurred during the marriage, such as mortgages, credit cards, car loans
Separate property, on the other hand, is owned by one spouse and is typically excluded from distribution. This may include:
- Property owned before the marriage
- Inheritances or gifts to one spouse (if not commingled)
- Assets acquired after the divorce filing
- Certain awards in litigation (depending on circumstances)
However, separate property can lose that status if it’s commingled with marital assets or enhanced in value through marital contributions.
How Are Debts Divided in New Jersey?
Just as property is divided, so are marital debts. New Jersey courts consider debt incurred during the marriage to be part of the marital estate, even if the debt is in one person’s name.
In deciding which spouse is responsible for which debt, courts look at who benefited from it, who incurred it, the ability to pay, and the broader context. For example:
- Credit card debt incurred for household expenses may be split
- Mortgage debt on the marital home may be assigned along with the property or paid off via sale
- Separate debts (e.g. student loans incurred before marriage) generally remain with the person who originally owed them
Divorce doesn’t have to mean financial chaos, if you understand how property and debt division works and get the right guidance. At Fiore Law Group, our skilled family law attorneys help clients in New Jersey protect what matters most. Whether you’re beginning the process or contesting a proposal, we’ll advocate for a fair outcome. Contact us today to schedule your consultation and safeguard your financial future.