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Debt and Equitable Distribution in North Carolina

Property division can be one of the most contentious parts of a divorce. Further complicating this process is the fact that courts must determine not just how marital property should be divided but even what qualifies as marital property. Equitable distribution is an option in North Carolina divorces, but the process for requesting it is not standardized throughout the state[1]. Some courts and localities have specific rules regarding filing for equitable distribution, so consulting with a Greensboro divorce lawyer will ensure the district requirements are met.

What is Equitable Distribution?

Equitable distribution is a method of dividing property in a divorce. This legal claim asks the court to determine the division that is most just and fair, rather than relying on an even 50/50 split between both spouses. Equitable distribution divides the parties’ marital property but not separate property.

Marital property is most often property that is acquired during the marriage, with a few exceptions, such as inheritances. Specifically, North Carolina statute defines marital property as “all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation.”[2] The statute also states that the property must be currently owned and not be determined to be separate property.

Separate property is generally anything that was owned by one spouse prior to marriage, and this type of property is not divided in the equitable distribution process. Marital property can include both assets and debts, but determining what property should be classified as marital is not always easy.

What Counts as Marital Property?

Marital property includes most assets and debts acquired by either or both spouses during the marriage and prior to separation, but this definition is not as helpful in real-world applications as it may initially seem. Judges will consider numerous factors when deciding whether property is marital or separate, including intention.

In Purvis v. Purvis[3], the North Carolina Court of Appeals ruled that the wife was responsible for her equitable share of the parties’ daughter’s education debt, despite the wife’s assertion that she did not benefit from the debt and should not be held liable. This case is a solid example of the complexities that exist in equitable distribution proceedings and why you should work with a Greensboro divorce lawyer to ensure your interests are protected in your divorce.

Despite the loan being in the husband’s name only, the lower court ordered the wife in Purvis to pay 25% of the balance of the loan. Payments had been made during the marriage from the parties’ joint account, and the wife had completed and submitted the application for the loan. Further, the appeals court affirmed that their daughter’s education was something both the husband and wife wanted and benefited from, and both parties benefited because, rather than pay out-of-pocket, the loan covered the costs of the daughter’s tuition and other expenses. Thus, the debt should be classified as marital.

Courts do not rely on a set guideline when determining the division of property; the unique circumstances of each case heavily influence equitable distribution. Having a divorce lawyer you can count on to advocate for you is crucial, and the Woodruff Family Law Group has the expertise you need during this process. Contact us to schedule your consultation.

[1] North Carolina Judicial Branch. Separation and Divorce. Equitable Distribution.

[2] NC General Statute. §50-20.

[3] Purvis v. Purvis, 280 N.C. App. 345, 867 S.E.2d 700.