A hot topic in New Jersey divorce law over the past few years had involved payment of college tuition and related expenses by divorcing (or divorced) parents. As an attorney practicing here in New Jersey, it is my fervent opinion that most folks do not feel it is fair that divorced couples are “forced” to pay for their child’s college education yet married families have the “option” to do so. Moreover, many parents are compelled by Family Courts here in New Jersey to pay for college expenses even in situations in which the parent and child have been estranged from one another. Finally, there is the never-ending controversy of divorced parents keeping one another “in the loop” with respect to making decisions related to college expenses.
“What happens to my debt when I get divorced?” is a very common question I am asked by clients starting the New Jersey Divorce Process. Typically, couples are worried about debt they have accrued on credit cards, a home equity line of credit, student loans, and car loans. Often, your attorney will review the documentation you provide and combined with other financial factors, explain options to you.
Every financial aspect of your divorce agreement is up for negotiation. This includes how all assets will be divided as well as who will assume debts once your divorce is finalized. It is critical to work with an attorney who can offer creative solutions to your debt exposure with great care that you will be financially sound in your post divorce life.
As you get started with the divorce process, we will file a complaint for divorce with the Superior Court of the county where you reside. As of that date, you and your spouse are no longer responsible for each other’s debts. At this time it is best to cancel your joint credit cards and open new individual accounts.
If you are going through a New Jersey Divorce you are probably wondering how your process will be affected by Hurricane Sandy. First and foremost, while this is an unprecedented event, I have great confidence that the legal community will do all that it can to get operations caught-up as soon as possible. While you may have an endless number of concerns and unique circumstances, they probably fall into one of the following categories: Property, finances, and the court’s schedule due to closings.
Property Damage and Your New Jersey Divorce:
For most divorcing couples, the marital home is their most valuable asset. During the storm, your house may have damage, minimally and substantially. This damage may require clean-up, construction, and probably hauling away of downed trees. In many New Jersey shore towns, year-round and vacation homes were rendered inhabitable or even completely demolished. All scenarios leave a tremendous amount of work to be done both physically and behind the scenes as homeowners deal with insurance companies, FEMA, and contractors.
If your home was damaged, and the property has already been assessed and figured into your divorce settlement, a plan needs to be put in place so the current condition is appropriately represented in all paperwork. If you still co-own these properties, you and your spouse will have to work together to get them brought back to pre-storm conditions. Your attorney can help you negotiate who has the obligation to coordinate repairs and work out financial responsibilities towards the rehabilitations. When parties do not agree, the court can be petitioned and your issues can be decided upon by a judge.
While the scale and scope of Hurricane Sandy may be unprecedented, a change in asset value during the process of a NJ Divorce is not. There is precedent in the case Scavone vs. Scavone (230 N.J. Super 482) Ch Div 1988. In this ruling the court stated that if the market forces a substantial change in value of a property, a divorcing couple will suffer that loss together. Therefore, even if your current plan is for one of you to buy the other out of the house, it is not done at the pre-storm condition or assessed value. If substantial value was lost, that loss is shared.
Financial Issues and Support Payments:
I will be writing separately on the ramifications of Hurricane Sandy on support payments. Globally speaking, any financial hardship suffered due to Hurricane Sandy is not an reason to not make a support (alimony or child support) payment. Those legally binding obligations still stand. For your personal financial situations, many individuals will have issues due to a loss of pay, delay of pay due to businesses being closed or inaccessible. Preliminarily, many banks are offering generous grace periods for insufficient funds. Creditors and utilities are altering due dates for payments. For your part, you need to be on top of your entire financial picture and remain in contact with your creditors to reschedule payments.
Many divorced parents revisit their child support arrangements when a child enters college. If the parents have been divorced for many years, college expenses may be significantly different than originally estimated. Additionally, parents may have had a change in their personal financial circumstances.
Often clients ask me a variation of the question “now that my child is in college, do I still have to pay child support?” Recently, a New Jersey Appellate Division handled that very question.
The scenario: The Jacoby’s were divorced and had two children. When the first entered college, Mr. Jacoby filed to reduce his child support payment to his ex-wife on the grounds that the child was no longer living full-time in her house. The court granted the change using formulas that showed that in fact the household expenses were lower since the child was not home full-time.
When the second child went off to college, Mr. Jacoby once again filed to have support modified on the same grounds, however this time it was denied and he appealed. You can click here to see the full ruling from the appellate court here.
The court did agree that the launch of a child off to college is certainly grounds to revisit support, the court stated that it was not an automatic occurrence, and many factors, including those related to the children and both parents should be considered. Citing several cases, child support modifications must be done in the best interest of the children. The occurrence of going to college may not in fact have such a drastic effect on the amount of child support paid.
How this can apply to you:
The Search for Hidden Assets in your Divorce…Divorce can be a contentious process. Rather than fight fairly and legally, some individuals do think they can skirt the system by hiding assets to avoid high alimony and child support payments. I’ve been a New Jersey divorce attorney for nearly 20 years and have seen this type of behavior in both high-net worth divorces and those involving more typical standards of living.
If you have discovered that your spouse or ex-spouse is or has hidden assets, you need a competent divorce and family law attorney. The deception is not only unethical but illegal and must be brought to the attention of the court. Likewise, if you have been accused of hiding assets, legal representation is essential to protect your rights. In either situation, it is urgent to consult with legal counsel.
If you are in the divorce process, and you think your spouse may try to hide assets, you should educate yourself about your finances immediately. Start collecting documents as soon as possible. Make a list of all possible sources of income, all places where financial vehicles can be kept, and any property of substantial value. Take close notice of what statements are already delivered to the house from financial institutions. Additionally, go back into your financial files and take note of statements that are no longer being sent home. Look for unusual and/or large ATM withdrawls, check-use and purchases for items that you have not seen. Often it is a good idea to put firm agreements into place as soon as the divorce process starts especially when your spouse can do some financial maneuvering with a few clicks of a computer mouse and your money can vanish before your eyes.