Debt in Divorce

Written by Jonathan Breeden

January 25, 2019

While divorcing couples in North Carolina may spend a lot of time trying to work out division of property, many overlook what happens to the financial obligations they’ve incurred over the course of their marriage. The issue may be clear-cut in the case of a mortgage or car loan, but questions regarding other types of debt in divorce can make the issue quite cloudy.

North Carolina divorce lawyer Jonathan Breeden understands that treatment of assets and debt can be both confusing and stressful. He’s dedicated to ensuring that the division of each of these elements is fair and in compliance with state law. To schedule an initial case consultation, call Breeden Law Office at (919) 661-4970, or reach out via our online form.

Marital Assets and Debt in Divorce

Under North Carolina law, all marital assets are subject to equitable division between the parties. Equity only requires fairness, so the distribution may not be an exact 50-50 split. The initial stage of the analysis is determining whether an asset is “marital” in nature. Only assets acquired by the parties after the wedding date and before separation will be divided according to equitable distribution rules.

Debts of the marriage undergo the same analysis. The critical issue, at least initially, is the date that the obligation was incurred. Any loans before marriage and after separation will be considered your own responsibility, and not that of your spouse’s.

Factors that Affect Equitable Distribution

There are some special considerations that may have an impact on the default rule for equitable distribution, including:

Rebuttable Presumption

North Carolina General Statute § 50-20 states that the designation of marital property is a legal presumption which can be overcome by evidence to the contrary. Therefore, it’s possible that a court will not define an asset or debt as “marital,” even if it was acquired during your marriage. If you’re trying to convince a judge that a financial obligation shouldn’t be marital, the burden of proof is on you.

The rebuttable presumption is often an issue when determining whether student loan debt is marital or separate in a divorce. The default rule would state that it’s an obligation of both spouses when one incurred it during the marriage. However, the degree behind the loan belongs to only one party. In such a case, rebutting the presumption means presenting evidence on how the loan was used, the duration of the marriage, and other relevant facts.

Distribution by Agreement

The statute on equitable distribution of marital assets and debts only applies if you have to go to court to get a decision on how to split up your property. Many couples can reach an amicable agreement on property distribution, which is more likely when you retain a skilled divorce attorney to facilitate negotiations.

Exceptions for Certain Types of Assets and Debts

North Carolina’s law on equitable distribution does include specific provisions on how designated items are defined as marital or separate. For instance:

  • Gifts and inheritances from other individuals belong to the spouse that receives them
  • The increase or decrease in value from separate property is attributed to the party that owns it
  • Any burden for separate property is a debt of the owner, such as a mortgage on real estate one party owned before marriage or after separation
  • Professional licenses or credentials are separate property.

Do You Have Questions About Debt in Divorce? Contact Us Today

Though this general overview may be helpful, there’s a multitude of factors that dictate how the law applies to debt in your specific divorce case. For additional information about how debts may affect your divorce, contact Breeden Law Office right away. You can schedule a consultation with attorney Jonathan Breeden by calling (919) 661-4970, or by visiting the firm online.


Divorce In North Carolina: What You Need To Know

A book by Jonathan Breeden