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Allocating Debt During Divorce


When parties are in the midst of a divorce, one bone of contention can be debt.  In many situations, high debt can be a major contributing factor to divorce. The general rule is marital debt is any debt incurred during the marriage for the benefit of the marriage.

There are various types of debt such as credit card debt, student loans and home equity lines of credit. Credit card bills are often the largest bone of contention. When it comes to credit card debt almost any expense today can be included.  Examples include home repairs, furniture, clothes for either spouse and the children, food and maintenance of the home such as lawncare.  If one of the spouses incurs a debt through the misuse of funds and that misuse has been charged to a credit card, then it may be possible to receive a credit for the amount through negotiations. For example, a misuse of funds may include an extravagant vacation taken alone or with another, the purchase of an expensive boat, numerous and excessive bills at various bars in the area. What is considered to be extravagant may also depend on upon the parties’ lifestyle.  Did one spouse often go on vacation without the other throughout the marriage and stay at high end hotels or was this a one off? If it can be shown that one party was dissipating marital assets, then court may assign that debt to the party making the purchase. Such debt would be characterized as “separate” debt, belonging the spouse who misused marital funds.

Student loans are often a different story.  Many questions come with student loans such as did both parties benefit from one spouse earning the degree?  Is the student loan debt from before the marriage?  Often when student loan debt is accumulated before the parties are married, each party keeps and continues to pay his or her own student debt.  Student debt accumulated during the marriage, may be divided between the parties as both parties benefitted from the increased income due to the student loans.

In terms of each party’s legal bills for the divorce, it is important to note, that both parties are entitled to have an attorney represent them. However, often one party does not want to pay the other party’s legal bills and payment of legal fees becomes a sticking point. Legal fees can be taken from joint funds but that often changes after the first retainer is exhausted. Many times there is not enough money in the joint bank account to pay both household expenses and legal bills.  If both parties want to battle it out in court, the money is quickly exhausted. If one party pays his or her own legal fees or someone pays it on his or her behalf, an application can be made to the court for the other person to assist with those fees. In other words, the parties are entitled to a “level playing field.” However, the outcome of such applications is case specific depending on many factors governed by case law and the court rules.

If you or someone you know is planning a divorce and has questions regarding the family’s debt, please contact the Thomas Roughneen & Associates. Our skilled team of attorneys are here to help you. For more information, please contact us visit our website at or call us at 973-937-6040.

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