For couples in North Carolina who are planning to divorce, one of the thorniest issues is how to handle debt that one or both spouses hold. In this state, the responsibility of each item of debt will depend on whose name is on it, when it was incurred, how the judge determines responsibility and other factors.
Debt from credit cards will be assigned to the person whose name is on the card. If both spouses have their names on it, the judge will decide the fairest way to divide it in terms of ability to pay and responsibility.
Mortgage debts are more complicated because of their size, and again, a judge is likely to decide who will have to take over the payments after the divorce. A couple may just sell the house, put the money towards the mortgage and then split any leftovers.
Auto loans are harder. Usually, one person becomes responsible for the debt and keeps the car. However, the situation can get messy if one person stops paying in the meantime, or the debt enters collections.
Medical debt is increasingly common, and it is settled on an individual basis. The size and timing of the debt, as well as the type of medical procedure, will play a role in deciding how much of the debt each person has to pay. For example, debt from cosmetic surgery will not be the same as debt from a life-saving emergency.
Dividing debt has to be worked out quickly so that payments and accounts don’t lapse and ruin everyone’s credit. Therefore, the better a couple can work through how to divide their debts, the better their financial result will be.