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Attorneys at Raleigh Divorce Law Firm

How do you divide debts in a divorce?

On Behalf of | Jan 12, 2020 | Property Division |

When it comes to dividing property in a divorce, most spouses worry about what will happen to their significant assets, such as the family home, their retirement benefits and their income. Essentially, many spouses think more about the financial assets they have, even though North Carolina law requires spouses to divide their financial liabilities as well.

Nowadays, debt is a reality for almost every individual and every couple, and the responsibility to pay that debt does not simply disappear because a couple divorces.

How do divorcing couples divide their debt?

In most cases, couples will divide their debt according to the same guidelines as they divide their other assets, including:

  • Each spouse’s financial needs;
  • Each spouse’s ability to pay the debts; and
  • How much each spouse contributed to the debt in question.

For example, family courts have the ability to divide debts equitably based on which spouse holds the most responsibility for accruing the debt during the marriage.

Whose name is the debt under?

Another critical factor that often plays a role in dividing marital debt is whose name is attached to the debt. After all, individuals are legally responsible to pay any debts in their name, such as:

  • Student loans
  • Credit card bills
  • Auto loans

However, the name on the debt can also make dividing debt more complicated. For example, many couples might share a credit card account, but if it is in only one spouse’s name, the banks and any other agencies will still expect the individual whose name is attached to the debt to pay, regardless of who incurred the debt.

It is often helpful to address debt before the divorce

In a recent blog post, we discussed how important it is for spouses to prepare their finances before a divorce. This also applies to debts.

It may not be easy for divorcing spouses to sit down and negotiate how to handle their debts, especially since debt can be a tense topic, but discussing it before the divorce can help spouses:

  • Determine how they will divide their marital debts equitably; and
  • Inform any banks or agencies about the divorce or changes in liabilities.

Dealing with debts can be complex and managing them during a divorce only complicates matters. It might be helpful for individuals to consult an experienced divorce attorney to figure out how to manage their debts and prepare their finances for their divorce.