Few people enter marriage with a firm grasp on all the financial implications that come along with merging their lives. New Jersey spouses can easily put themselves in the position to be held liable for each other's debts, whether they realize it or not.
Joint Credit Accounts
One common way couples commit to sharing debt is through a joint credit account. Both spouses sign a credit application for a loan or a credit card. Both names appear on the account, and both account holders can use the money that is available. When the bills start coming, each spouse is legally responsible for the full amount of every bill, no matter which one actually charged a purchase.
Joint credit account holders should be aware that every individual has an individual credit history developed over a lifetime. When marriage partners have a joint account, the entire debt on the account is listed in each partner's individual credit history and will affect each person's individual credit score. When the account is managed responsibly, both partners benefit and should see increased credit scores. However, if either partner mismanages the account by keeping it constantly maxed out or failing to pay bills, the result will be negative for both partners.
In the case of divorce, joint credit agreements will outlast the marriage. Even if one spouse agrees to make payments on an account, the lender still has a contract with both parties and can hold either one responsible. It is wise to pay off and close joint accounts when a marriage ends.
Joint Bankruptcy In New Jersey
Another challenge couples may face in sharing their financial concerns can come when facing bankruptcy during divorce or while married. Filing for bankruptcy might become necessary when debts are overwhelming. It can result in discharging debts, so they no longer need to be paid. A married couple can opt to file for bankruptcy jointly, or either partner or both can file separately.
If a married person files separately for bankruptcy, the bankruptcy court will consider all debts that belong entirely to that person. Joint debts are not included, including joint credit card and loan debt. For a couple who decide that each should file separately for bankruptcy, the process could be ineffective in salvaging their finances if a large portion of their debt is in joint accounts.
A drawback to filing jointly is that all the property both spouses own is considered, and in some types of bankruptcy property must be sold off. If one spouse wants to keep property that is in that spouse's name alone, it might be a better idea for the other spouse to file for bankruptcy separately.
Get Help for Bankruptcy In New Jersey
Obviously, bankruptcy and joint credit issues are complex, and anyone who is looking into this option needs expert advice. An experienced attorney can help weigh the advantages and disadvantages of joint bankruptcy in New Jersey. Give us a call at 973-870-0434, we're here to help.