Money matters are among the most contentious issues in a divorce. In cases where the couple cannot agree on how to divide property and debt, the court will step in and assign each spouse their part.
Under North Carolina laws, marital assets are divided equitably – and that’s not always equal. So, too, are the marital debts. It’s smart to understand how your marital debts figure into your divorce.
Equitable division does not have to be 50/50
The portion of debt each party will end up with depends on several factors, which is why it may not be equal. For instance, the duration of the marriage, your spouse’s age, and health, as well as their income and assets, are just some of the considerations the court will take into account when dividing marital debts.
What if your ex-spouse defaults on joint debts?
Creditors are not bound by the court’s decisions. If you have jointly held debts with your spouse, this means that you are still legally bound by the agreement you signed with the creditor. If your ex-spouse is assigned a joint debt and defaults, you can still be the target of collection actions. That’s why it’s often wise to make refinancing each party’s share of the joint debts into their own name part of your divorce agreement.
Dividing marital debt may even be more complex than property division because it keeps you and your ex-spouse connected while both of you are trying to go separate ways. Therefore, it is necessary that you are well informed on what to expect and plan your financial future without any uncertainty. Above all, it is equally important to protect your rights and ensure that you do not end up bearing more debt than you deserve.
