Dealing with debt can already be a stressful matter. Whether it is a hefty sum on a credit card or a loan for a large investment, it becomes a part of your budget plan to pay it.
The stress surrounding debt can increase significantly in the event of a divorce. It is a critical issue you and your spouse must address while ending your marriage. Here are some of the key things to understand as you handle this.
2 important things to know in debt division
There are many matters to address within the process of dividing assets in divorce. Debt is merely one of them. However, dividing debt comes with its own complexities. It can help to tackle these complexities by answering the following questions:
- Who owes the debt? North Carolina is not a community property state. Therefore, marital debt is not automatically divided equally between you and your spouse. There are many other factors that the court or the couples must consider to determine who is responsible for paying the debt. Sometimes it is fairly clear, such as if the loan is already in only one spouse’s name. In other cases, dividing responsibility requires more calculations as well as the official revision of the loan documents and agreements.
- Have all debts been disclosed? In 2020, CNBC reported that nearly 43% of United States residents hide significant credit card debt from their spouse or partner. Many people feel shame about debt, but hiding it can create much larger problems within the relationship as well as in the divorce process. When dividing property, it is important to make sure you list and address all assets. It may help to seek counsel from a financial or legal professional if you suspect your spouse is hiding debt or assets.
Your primary goal in divorce is not only to reach fair agreements but to protect your future. Significant amounts of debt in your post-divorce financial situation can create challenges as you move forward. So, it is important to address these matters proactively in your divorce.