Pre-Marital Debts

While the distribution of assets is an important component of a divorce, in many cases the allocation of marital debt is equally or more important. Under New Jersey’s rules regarding equitable distribution, marital assets and marital debts are divided upon divorce. But what about outstanding debts incurred before the marriage by either or both parties? The general rule is that pre-marital debts belong to the spouse who incurred them. However, there are exceptions to this rule. If you need advice on a debt issue, contact Bergen County debt division lawyer Brian D. Iton. He has over two decades of experience handling family law issues for Northern New Jersey residents.

As the trend continues for couples to marry later in life most individuals enter marriage with an established financial history. Common forms of pre-marital debt include mortgages, credit card debts, medical debts, student loans, and automobile loans. The general rule in New Jersey is that any debt incurred by one spouse prior to the marriage is separate debt—just as property acquired prior to the marriage is separate property. However, there are quite a few scenarios where pre-marital debt can be treated as marital debt. For instance, credit card debt incurred in one spouse’s name for wedding and honeymoon expenses can be treated as marital debt at the time of divorce. The logic is that it would be unfair for one party to bear the full burden of paying for the couple’s joint wedding expenses. Of course, if there is evidence that assuming the wedding debt by one party was intended and agreed to by both parties the debt would remain separate. Similarly, if prior to the marriage the parties agreed to buy furniture for their joint use, but they paid for the furniture using one party’s credit cards, the indebted spouse would have the option of either keeping the furniture or receiving half of the monies for the outstanding debt.

The real issue to be addressed when analyzing pre-marital debt is what the parties intentions were when the debt was incurred. If they jointly agreed to make a purchase which would benefit them both was the purchase to be a joint obligation, (e.g., they would both pay for a car note), or was it a gift from one party to the other, where there was no expectation that they would jointly shoulder the debt obligation. For instance, if prior to the marriage one spouse treated the other to expensive vacations paid for on their credit cards, there would not be a strong argument that the pre-marital vacation debt should be jointly split.

Regardless of how a court assigns a debt, one important item to note is that creditors and debtors have a contractual relationship that is not affected by divorce orders. To illustrate, if the parties purchase a car in wife’s name prior to the marriage, and husband wants to keep the car at the time of divorce, and he agrees to make the payments on the car, the automobile leasing or financing company will not let the wife “off the hook” with regard to liability for payments. The proper procedure is to have the party keeping the car agree in the property settlement agreement that they will “indemnify and hold harmless” the other party from any and all claims from the creditor.

When couples marry, they rarely anticipate the difficulties that may arise from their financial arrangements in the event of divorce. There are numerous situations in which it is difficult to determine the separate or marital character of pre-marital debts. If you need help understanding how your pre-marital debt may be treated in divorce, contact Bergen County attorney Brian D. Iton toll-free at (844) 431-3380, or contact us online to set up a free consultation. Brian D. Iton assists people who need a divorce attorney throughout Bergen, Hudson, Essex, and Passaic Counties, including in Hackensack, Jersey City, Newark, and Paterson.