During marriage, it can be easy to trivialize which spouse owns what and whose debt is whose - As partners, you’re likely happy to work under the philosophy of “what’s yours is mine and what’s mine is yours.” However, during divorce, this philosophy can go straight out the window. This is why it’s so important to go into divorce with a clear and accurate financial picture.
What are assets?
Simply stated, assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset).
New York, New Jersey, and Connecticut are all common law property states. This means that any assets acquired before the marriage are considered separate property and are owned only by that original owner. A spouse can, however, transfer the title of any of his or her separate property to the other spouse (gift) or to the community property (making a spouse an account holder on bank account). If both spouses' names are on the title or deed, each owns a one-half interest.
What are debts?
Debt is money owed by a borrower to a lender.
As part of the divorce judgment, the court will divide the couple's debts and assets. In New York, New Jersey, and Connecticut, the courts take into account the assets and debts each party brought to the marriage. The court will indicate which party is responsible for paying which bills while dividing property and money. Generally, the court tries to divide assets and debts equally; however, they can also be used to balance one another. For example, a spouse who receives more property might also be assigned more debt.
Alternatively, the parties to a divorce may agree to enter into a settlement agreement, instead of letting the court decide. Of course, one must keep in mind that a prenuptial agreement would affect any settlement.
What can you do if your ex doesn’t pay?
If your ex-spouse does not pay, creditors can still come after you. Stressful as it may be, you do have recourse. You can petition the court to enforce the divorce agreement; your ex may face additional fines and even jail time when you do this. If you’re able to, you should go ahead and pay the debt to ensure interest and penalties don’t accrue, just be sure to keep proof of payment and to then notify the family court for assistance in being reimbursed by your ex.
If you’re facing divorce, don’t leave money matters on the table. Book your free consultation online at any one of our eight office locations now to learn from one of our legal experts what the first steps you need to take are and what you can expect during the divorce proceedings. We’ve helped many get through challenging separations and divorces and we can help guide you, too.