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Dividing assets and debt in a divorce

| Apr 9, 2020 | Firm News

Most states in this county, like North Carolina, are equitable distribution states. Thus, if a couple in North Carolina gets a divorce, a judge will determine how to split their shared assets in a way that is “fair”; this is not necessarily an equal split. This method would also apply to any shared debt, which would include student loans that were taken out during marriage and which were co-signed by both spouses.

Though contract law dictates that a loan co-signer will always be responsible for a loan – which means it is reasonable that the co-signer cannot discharge the debt through a divorce – there is nothing that makes a spouse responsible for his or her partner’s student debt if the debt holder took out the loan in his or her own name. North Carolina residents are fortunate in this regard, since community property states would typically hold both spouses equally responsible for student loan debt incurred during marriage.

In just about any state and under any circumstances, a spouse will not be found liable in a divorce for student debt that was incurred by the other spouse prior to marriage. The same would not necessarily be true for assets acquired during the marriage. For instance, if one person bought a house before marriage, but that person’s spouse contributed to the home value during the marriage, then the money put into the house during the marriage would be marital property.

It can be hard to guess how a judge will decide to divide assets and debt when entering a divorce judgment. Ideally, parties to a divorce will reach an agreement on the division of their property without the need for a judge’s order. A North Carolina family law attorney can help some individuals negotiate a settlement before the matter goes in front of the judge for a final decision.