Who is Responsible for Debt?
Property that is acquired during a marriage by one or both
spouses, and owned on the date of a formal separation, may be
defined as marital property. If a divorce occurs, this property is
subject to the equitable distribution law of North Carolina.
(Excluded from the definition are gifts and inheritances, received
by one spouse only, from third parties.)
Although “property” is generally thought of in terms of
assets, it also includes all debts acquired during the marriage,
and both parties are responsible for it. Equitable distribution
law presumes that an equal (50/50) division of the marital
property is fair and equitable. In North Carolina, most judges
favor awarding each party 50 percent of the marital property,
unless certain factors make a good case for an unequal
Some of the factors the court may consider in deciding whether
there is a good case for an unequal division of the marital
- An obligation for support arising out of a prior marriage.
- A need for the custodial parent to reside in the marital
- The duration of marriage.
- The age and physical and mental health of both parties.
- The income-earning potential of both parties.
- The previous direct or indirect contribution by one spouse
toward the education or career potential of the other spouse.
Marital debt can actually lead to each spouse receiving a
negative sum. For example, if the net value of the marital
property is $100,000, applying the 50/50 presumption leads to each
spouse's receiving property worth a total of $50,000. If, on the
other hand, the marital property has a negative net value of, say,
minus $20,000 (due to large debts that outweigh the spouses'
positive assets), then applying the presumption leads to each
spouse's receiving property worth a total of negative $10,000.
How you deal with debt is important and could affect you for
years to come. There are several areas that need your attention.
The first has to do with debt that you have acquired during the
marriage. You will need to obtain a copy of your credit history to
determine whether there is any derogatory information that has
been reported to the various agencies.
Not all of your personal marital debts will appear on these
reports, only those for which the creditors consider you
responsible. For example, if you have a joint credit card that you
and your spouse have cosigned for, the payment history related to
that card will appear on both your and your spouse’s credit
histories. However, if the credit card is in your spouse’s name
and you are just an authorized user, the payment history may only
appear in your spouse’s name. This can be both good and bad. If
the credit history is good and in both names, you will benefit
from it. The opposite is true if the credit history is bad.
Credit card companies should be notified immediately of your
situation and joint accounts closed, if possible, because
creditors will still consider you responsible for any joint debts.
Although no additional debts will accumulate that are acquired by
your spouse, you will still be considered responsible for
previously existing debt. Because of this, it would also be in
your best interests to pay off any joint debts and establish
separate credit prior to the division of assets.
Fault is not considered relevant in equitable distribution
cases, unless marital misconduct has had an economic impact on the
value of the marital estate. If the division of assets is
contested, you should hire an attorney to file a temporary
injunction to protect your rights, and the marital property.
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