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What Happens to Debt When I Divorce?

In Separation & Divorce by Elizabeth Stephenson

When most people think about property division and divorce, they usually think about money, houses, investments, business interests, retirement, and personal property. This is natural, as the title is “property division” and the ultimate question is: who walks away with what? Despite the focus on property, another critical question that must be resolved when dividing property is: what happens to debt? North Carolina is an Equitable Distribution State Property division in North Carolina is referred to as “equitable distribution.” This means that all property deemed “marital” property is divided in an “equitable” manner—which generally starts off as a split down the middle, followed by the court making adjustments based on numerous statutory factors that make the division fairer. While people don’t like thinking about debt, it is an issue that …

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Restoring Your Credit After a Messy Divorce

In Separation & Divorce, Wealth by Elizabeth Stephenson

There is often a correlation between financial struggles and marital struggles. When a couple goes into debt, problems seem to escalate. The pressure of having no money, of making bad financial decision, of having to sell property, and of harassing creditor calls can make any small argument somehow become explosive. The day-to-day pressure can ultimately end a marriage. When the dust of a divorce clears, and equitable distribution proceedings have been completed, you may find yourself with a poor credit score. This can be attributed to several factors: You were already financially struggling prior to your separation. Due to poor choices with money and excessive borrowing, you and/or your spouse were already overwhelmed with debt. Divorce proceedings do not fix or alleviate financial problems. Separation and divorce can be costly, …

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Debt and Divorce

In Separation & Divorce by Elizabeth Stephenson

In a division of property upon divorce, North Carolina courts are tasked with determining an equitable division of marital property. Marital property is generally any property acquired during the marriage, with a few defined exceptions. Classifying property as marital or separate can be a hotly contested matter as separate property is not subject to a division. Like with property, debt is also a source of controversy when a court divides property. Unfortunately, the laws regarding marital and separate debt can be trickier to sort out. This is because unlike marital property, debt assumed during a marriage does not necessarily constitute marital debt. Instead, only debt that is assumed for the joint benefit of the married couple is considered marital debt that is subject to division. When determining whether a debt …