How is Debt Divided in Divorce?

Are you preparing for a divorce in Charlotte, Mecklenburg County, or elsewhere in the wider region? If so, you are going to need to figure out who gets to keep what. Notably, as part of the divorce process, you and your spouse will also need to deal with any marital debt.

This raises an important question: How is debt divided in divorce? In North Carolina, debt is subject to equitable distribution. Here, our Charlotte divorce lawyer provides a comprehensive overview of the most important things to know about the division of share debt in a divorce in North Carolina.

Marital Debt in a Divorce Can Be a Challenging, Contentious Issue in a Divorce

For married couples in North Carolina who are getting ready for a divorce, dividing up the debt—the outstanding financial obligations—can be especially hard. It is not uncommon for serious disputes to arise in these cases. Indeed, disagreements often arise over who is responsible for certain debts—especially if one spouse believes they did not benefit from the expense. Some of the most common types of debts that are an issue include:

  • Credit Card Debt: Credit card debt includes balances on accounts used during the marriage, including for daily expenses and major purchases.
  • Mortgage Debt: Debt from loans taken to purchase a marital home or other real estate. Deciding who retains the property and how to handle the remaining mortgage is key.
  • Auto Loans: Loans for vehicles acquired during the marriage. The dispute often centers on who will keep the car and be responsible for the remaining loan payments after the divorce.
  • Student Loans: Educational debts incurred during the marriage by one or both spouses. Controversy may occur over whether these loans should be considered marital debt.
  • Medical Debt: Unpaid medical bills for treatments or procedures that occurred during the marriage. Medical debt is a significant issue for many people in North Carolina.

A Key Question: Is Debt Marital or Separate?

Determining whether a debt is marital or separate is crucial in a North Carolina divorce. Marital debt includes any obligations incurred by either spouse during the marriage for the benefit of the marriage—from a mortgage to car loans to credit cards. Separate debt refers to debts acquired before the marriage, after separation, or debts not intended for the marriage’s benefit.

The Bottom Line: Each spouse is responsible for their separate debt as an individual. However, marital debt is the responsibility of both spouses and will be assigned as part of the divorce.

North Carolina is an Equitable Distribution State

Under North Carolina law (G.S. 50-20), an equitable distribution standard is used to determine how marital property should be divided. In our state, a 50/50 split of the property (and liabilities) is not guaranteed as a matter of state policy. The court seeks a fair, but not necessarily equal, division based on various factors. These factors can include the duration of the marriage, each spouse’s income and assets, contributions to the marriage (financial and non-financial), and future needs.

Marital Debt is Subject to Equitable Distribution in North Carolina

In North Carolina, marital debt is treated on par with marital assets when it comes to equitable distribution. The court assesses all debts incurred during the marriage to determine how they should be fairly allocated between the spouses. Factors influencing this decision may include who benefited from the debt, the purpose behind incurring it, and each spouse’s ability to repay.

Here is a simple example: Imagine that a spouse used their joint credit card to rack up $10,000 in gambling debt shortly before a couple filed for divorce. A court may look at that specific debt and, when applying North Carolina’s equitable distribution standard, determine that the “fair” outcome is to assign that joint credit card debt solely to the spouse who incurred the gambling losses.

Collaborative Solutions Often Work Best for Property Division

A collaborative approach can often be the best option for a divorcing couple trying to deal with issues related to property division, including debt division. By working together outside of court, spouses can tailor agreements to their specific needs and preferences. In some situations, a structured process, such as mediation, can be the best option for couples to resolve their issues.

How Our Charlotte Divorce Attorney Can Help With Debt Division

Dealing with debt in a divorce can be complicated. You do not have to figure out everything on your own. At Remington & Dixon, PLLC, we provide comprehensive divorce representation. Along with other property division questions, our Charlotte divorce lawyer is prepared to help you resolve issues related to marital debt. We have the experience that you can depend on.

Contact Our Charlotte Divorce Lawyer Today for a Confidential Consultation

At Remington & Dixon, PLLC, our Charlotte divorce attorney is standing by, ready to protect your rights and your interests. If you have any questions or concerns about debt division in a divorce, we are more than ready to help. Contact us today to arrange a strictly private, no-obligation initial case review. With a law office in Charlotte, we handle contested and uncontested divorce cases in Mecklenburg County and throughout the surrounding area in North Carolina And throughout North Carolina.

FAQs

Are consultations free?

While we offer a free consultation on traffic matters, criminal matters, and some professional license defense cases (if you have a pending Board complaint), we charge a fee for family law consultations to personalize our consultations to your specific needs. To learn about our fee structure, please get in touch.

Where can I get legal advice?

We recommend meeting with an attorney. While there is free legal help available for North Carolina residents from pro bono resources for civil matters, and public defenders for criminal cases, the best way to access tailored advice is to hire a lawyer.

Can I hire you if I’m in another state?

This is done on a case by case basis if you are involved in a family law, criminal, or professional disciplinary matter that involves another jurisdiction.

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