Legal Question in Credit and Debt Law in North Carolina

It depends. As you live in NC and, I assume, will be married or are already married and live here, know that we are an equitable distribution state. What this means is that you generally are liable for your debts and your spouse, his or her own debts. Neither spouse is liable for the debts created by the other which were incurred before marriage.

After marriage, the rule is basically the same. You would not be liable for your spouse's credit card debt and vice-a-versa. However, for debts for which you both apply (like a joint credit card) you would be liable. Also, in some cases, if your spouse is just an authorized user, then he or she is not generally liable. He or she might be liable for any purchases made though if those have not been paid for.

The exception is for things called "necessaries." Necessaries are things like medical care. If you are married and you go into the hospital and get treatment, even if your spouse does not sign anything, then he or she is going to be liable for the bill if you do not pay.

You ask if "assets are safe" if a debt is turned over to collections. Just turning a debt over to collection means nothing. The creditors or junk debt buyers cannot get anything. They need a judgment before they can start attaching assets.

And no, things may not be entirely safe, but it would depend on what the asset is. Things like real property, if owned as husband and wife, is entirely safe if the debt belongs to only one of the spouses. If a car is owned jointly, then only 1/2 the value of the car is safe. The spouse who owes the debt can only exempt up to $3500 of equity. As a practical matter, depending on if money is still owed to the finance company and the value of the car, it is not likely that the creditor would move to sell the car, so this probably would be safe, but I cannot give any guarantees.

Things like bank accounts are not safe. After a creditor gets a judgment, they can levy (seize) a bank account. Its up to you to fight to get the money back and prove that it was really your spouse's money and not yours. Bottom line is once the money is gone, its gone -its too hard to fight to get your money back. Protetct yourself and your spouse by getting separate bank accounts.

It also depends on the source of the money - if you get Social Security or unemployment or something, you generally lose those protections by commingling those funds with another person who may or may not have exemptions. This is another reason for getting a separate bank account. You don't want to (a) mingle your funds with funds of another person; or (b) mingle just your exempt funds with non-exempt funds.

Rather than worry about which assets are safe or not safe, better to start thinking NOW about how you would resolve the debt. All of this depends on your circumstances. If you are 93, own nothing, are on Medicaid and in a nursing home, it doesn't make much sense to either settle your debts or file bankruptcy. If you are going to be needing credit in the future, then you need to think about resolving the debt.

First, what kind of debt is it? How much is owed? If it is a credit debt, is this your only debt? If you have a lot of debts or if this is medical debt for which your spouse would be liable if the debt was incurred during the marriage, maybe then you need to have a consult with a bankruptcy attorney. Many attorneys give free consults and just because you get a consult does not mean that you have to file bankruptcy now.

If the debt is small and is for something like a credit card debt or an unpaid car loan, then you would not file bankruptcy. Start saving your funds. Debts can be settled at any time - some for as low as 15% others for 100%. It depends on the kind of debt, how you want to pay (either lump sum or in payments), the creditor and the stage of the case. Debts that have gone to judgment settle on average for between 50% and 80%. Debts which are early in the process will settle for under 50%.

If you don't have the funds, I am not a fan of payment plans. I would advise you to save up and when you have about 50% of whatever the balance is at that time, then make an offer to settle, not before. But its your call. Its your credit, which is already toast, and making a payment plan with a debt collector will not make it better. Once you resolve the debt it will get better, but not before.

Get any settlement terms IN WRITING before you pay them a dime. You want a statement that if you pay the amount stated (either over time or in a lump sum) that the debt will be considered paid in full and reported appropriately to the credit bureaus.

If you want to more specifically discuss this case in confidence, I give free consults via email. You can contact me at [email protected]. If this is your only debt, I also engage in private debt resolution for a reasonable fee.

If you have a lot of debts and are interested in alternatives to bankruptcy, consider a debt resolution company. There are many scam artists out there, but this company is one of the few legitimate ones: http://www.national-legal-center.com.

As with all things, I would encourage you to check them out.