Many divorcing couples focus on equitable distribution of marital assets. That said, something else represents an issue when marriages end. What happens with the accumulation of marital debt?
Truth be told, money problems often contribute to divorce. The stress and blame both act as relevant factors in determining that things aren’t working well between a couple. No doubt financial insolvency plays a role in some couples deciding to focus on marital dissolution.
Just as the courts intervene on dividing up property, the same is true when it comes to assigning marital debt. A recent New Jersey unpublished Appellate Court decision provides some insight into how the court ruled in one particular situation.
Case Focused on Marital Debt and Husband’s Student Loan
The New Jersey Appellate Division decided the matter of Mehrzad Azmi Shabestari v. Farhadi on June 18, 2019. Although you can read the written opinion, the fact that it is marked “unpublished” means that it does not represent precedent.
Although Mehrzad Azmi Shabestari initially filed for divorce against Reza Farhadi, the court awarded a dual final judgment to the parties on March 14, 2018. Subsequently, Shabestari appealed the decision.
First, some background. The couple first married in Iran on July 22, 2011. They married again in the Somerset on July 26, 2014. Shabestari and Farhadi had no children together.
However, they did have something else. When the parties moved to New Jersey in 2011, they both enrolled as post-graduate Ph.D. students. Not surprisingly, they accumulated a great deal of debt as far as student loans.
According to Shabestari, he took out two student loans that totaled over $145K. Meanwhile, his tuition expenses amounted to only $80K. Apparently, Shabestari figured the balance could be used to take care of marital expenses.
One problem. In the meantime, the defendant admitted that he let over $43K accrue in loan interest. It seems he didn’t complete his coursework according to his schedule.
Meanwhile, Shabestari’s parents decided to help out their son and daughter-in-law. They provided them with over $225K in cash to subsidize the marital expenses.
When the defendant completed the Case Information Statement (CIS,) student loan debt was listed at over $176K. Nonetheless, Shabestari claimed his tuition was fully paid directly to Rutgers.
As far as the defendant’s claim that the balance of the loans was applied to living expenses, the judge didn’t find any evidence that the funds were deposited into the couple’s joint account or used for joint expenses.
Notably, Shabestari had a green card and applied for the student loans as an unmarried student.
Wife Did Not Qualify for Student Loans
In the meantime, Farhadi’s immigration status precluded her from eligibility for student loans. Her parents gifted her money to pay tuition. Both parties conceded that Farhadi maintained a separate account, where she deposited money she earned as well as the gifts from her mother and father.
Conversely, Shabestari said he used a joint account for some of the money that came to him. He even put some of the funds in the plaintiff’s individual account.
According to the defendant, his contributions towards the marital expenses exceeded more than $289K over those made by his former wife. Although he sought equitable distribution of the monies, he provided the court with no evidence supporting his requests for reimbursement. The husband’s assertion did not come up until the last day of the couple’s seven-day divorce trial.
Notably, Shabestari didn’t bother to list the loans from his parents on the amended CIS until the eve of the trial. The defendant claimed the loans amounted to nearly $233K and were a joint responsibility. In fact, he said that Farhadi and her parents “silently assented” to a loan agreement.
The parties both owned separate property in Iran. That said, they had no significant assets in the United States.
As far as Farhadi was concerned, she left the marriage without any debt. She also obtained employment, while her former husband allowed interest on his student loans to accrue. He remained unemployed.
Court Disagreed with the Husband’s Assertions
Upon consideration, the trial court found that Shabestari failed to supply evidence supporting his contentions. Indeed, it was the plaintiff who provided documentation that supported her proofs. Interestingly enough, the defendant did not dispute the evidence offered in support of his former wife’s submissions to the court.
During the trial, Shabestari’s father did come in to testify. However, the defendant admitted that he had no written documentation to substantiate his claim that his parents expected he and his wife to pay back loans. Therefore, he “failed to defeat the presumption that the monies from his parents were a gift.”
Issues also arose concerning Shabestari’s obligations to Farhadi for one-half of the rental payments. It appears that the defendant abandoned the premises and assumed that meant he no longer had to pay rent. The judge disagreed.
In the end, all of the defendant’s arguments failed, and the Appellate Court agreed with the trial judge as far as the allocations concerning marital debt.
Equitable distribution doesn’t just involve dividing assets. Marital debt also comes into play. The Law Offices of Sam Stoia can review your individual situation and provide your experienced legal advice. Contact us to see how we can assist you.