North Carolina Equitable Distribution Law Also Applies to Accumulated Marital Debts

When a marriage ends, North Carolina spouses frequently disagree about the disposition of assets acquired while the couple was wed. Disputes over who gets the house, the car or even the dog might thwart a settlement. The state’s law on equitable distribution does not just apply to marital assets, though. Some marriage dissolution proceedings include conflicts over who will be responsible for the couple’s debts going forward.

Liabilities accumulated during the marriage must be addressed either through an agreement between the parties or the court in an equitable distribution analysis. Some the most common household debts include mortgage obligations, active vehicle loans, medical bills and credit-card balances. As with assets, a threshold question regarding debts is whether they should classified as separate or included within the divorce proceeding. Separate debts, such as those incurred by one party before the couple was wed, remain with that individual when the marriage is dissolved.

Shared credit cards, home loans and other obligations that benefited both parties likely will fall into the marital estate. However, even when a particular item is considered martial property, a judge might not consider it fair to apportion equal debt to each spouse as they go their separate ways. One potential example is when one spouse secretly runs up bills on a joint credit card, possibly to carry on an extramarital affair or engage in fraudulent activity.

Under North Carolina law, judges conducting an equitable distribution analysis generally start with a presumption that marital assets and debts will be divided evenly. This can change if the judge believes that a 50/50 breakdown is not unique under the specific circumstances. Factors the court considers include the following:

• Each spouse’s income and earning ability
• The duration of the marriage
• Whether it is preferable for one party to retain ownership of the family home and responsibility for the mortgage because they have primary physical custody of the couple’s children
• Comparative responsibility for a particular debt on the part of each spouse

A court order assigning a debt to one spouse does not change the contractual obligation to the creditor. If your name remains on a loan or credit account, the creditor can seek payment from you unless the account is refinanced or the creditor agrees to release you. Should no refinance or release occur, you could then seek reimbursement from your former spouse. Each situation is unique and if you expect dividing debts to be a concern in your divorce, you should speak with a family law attorney about how a judge might decide your case.

The Moore Law Office, PLLC represents North Carolina residents in divorce proceedings and assists with all types of equitable distribution issues. Contact us by calling 828-258-8053 or use our online form to set an initial consultation.