When New Jersey residents end their marriages, their thoughts often turn to dividing up the marital estate. However, the couple’s debts will also need to be dealt with in the divorce settlement. Doing so could get complex and contentious if the majority of the financial obligations are joint.
Ordinarily, each party agrees to take responsibility for paying certain financial obligations. However, that does not necessarily guarantee that the payments will be made. A creditor is not required to honor a divorce decree, so if one party fails to make the promised payments, a lender may be able to pursue the other spouse for payment. The best way to combat this is to have the name of the spouse who will not be paying the debt taken off the account, if possible.
If one party fails to pay the debt as ordered, it is possible to go back to court. This is just one reason why the divorce settlement needs to be as specific as possible. Even though this option is available, it could take some time to resolve the issue, so arrangements need to be made during the proceedings to account for keeping the obligation current. It might be a good idea for each party to keep an eye on his or her individual credit reports as well. Otherwise, one party might not know until it is too late that the other is not paying the debt or debts he or she is required to pay.
Furthermore, the divorce settlement can provide for consequences if a debt is not kept current and paid as agreed. New Jersey residents can structure their agreements as they like so long as the provisions do not violate the law or public policy. Once the parties have worked out how they will deal with their debts — along with their other issues — the agreement can be presented to the court for approval.
Source: blog.credit.com, “Does Getting a Divorce Hurt Your Credit?“, Brooke Niemeyer, July 2, 2016