Legal Question in Credit and Debt Law in North Carolina

It depends on a lot of information that you did not provide to me. I don't know what kind of debt this is. I don't know what assets you have or how they are titled.

I can tell you generally that if this is for something like a credit card debt, then your spouse is not liable for your debts and vice-a-versa provided that he or she was not on the card, that is, he or she was not a co-borrower. If he/she used the card, then in that event he/she might be liable for his/her purchases. If he/she was just an authorized user and never used the card, then he/she is not liable.

The only exception would be where he/she is a co-borrower (like on a mortgage) or under something called "the doctrine of necessaries." Necessaries are things like food, clothing, shelter and medical care. For example, if you go to the emergency room of a hospital and rack up a bill for which you cannot pay, the hospital can sue you and your spouse and your spouse is liable for the medical treatment that you received even if he/she did not know about it or consent to it or sign anything. The exception to the doctrine of necessaries is where spouses are still married but separated and they have a valid separation agreement and the hospital is aware of the fact.

A creditor can do nothing until they get a judgment. Even if the judgment is against you and you own land along with your spouse (his/her name must be on the deed and the deed has to reflect that the property is owned by you and your spouse as husband and wife) then the creditor cannot take your house. However, if you go to sell the house, the creditor will seize up to 1/2 of the equity in the house if it is sold. This rule only applies to land. For things like cars or other jointly titled assets, these are owned as a tenancy in common and they can seize 1/2 of the assets. So it will depend on what you have and how much equity is in it.

It is unlikely that a creditor would take a car belonging to both of you if it is owned free and clear as, it costs money to have the sheriff sell the car and the sale has to bring in enough money to compensate your spouse for his/her share and still be enough to pay any judgment. If its liened (like where you are still paying the finance company), then a sale is very unlikely. It again depends on the type of car and the amount of equity.

Note that you get certain exemptions; you can exempt up to $3500 of equity for one motor vehicle. If both of you are sued, you can each exempt $3500 of equity for a total of $7000. Do you have a car or two cars worth more than that?

Since you are asking this question, I assume that you are in or soon will be in some kind of financial trouble. Depends on what you have and what you owe, but it may make sense to get a consult with a bankruptcy attorney to find out about it. Many attorneys give free consults and just because you have one does not mean that you need to file now. You can even file bankruptcy after judgment so I would delay it for as long as possible.

Bankruptcy is not right for everyone and I don't know your situation. There are other options. (1) Debts can be settled before, during or after judgment; even if you do not have money today, start saving. When you have at least 50%, you can try to settle on your own or I (or another attorney) can assist you for a fee. (2) If you don't have enough to settle, alternatively, payment plans can be worked out so that the creditors will not execute on your property. (3) Have you considered debt consolidation? That is where your interest rate is fixed on your accounts and you pay a lump sum to consumer credit counseling and they in turn pay your creditors according to a debt management plan. (4) Debt management/debt consolidation does not work for everyone. Depending on your circumstances, debt settlement might be a good alternative. With a debt settlement program, it forces you to save and start building funds. Your debts are settled one at a time, as you build up and have available funds. This program is good for people who need the discipline and structure.

There are many debt settlement companies bordering on scam artists that take your money, destroy whatever credit you had and run. Here is a link to one of the few good actors; I am sure there are others, but you can check them out and decide for yourself:

http://www.nationallegalsystems.com.

Full disclosure: I provide legal services to Georgia and Pennsylvania clients of National Legal Systems (I am admitted to the practice of law in those jurisdictions). While I am also admitted to practice law in North Carolina, another attorney handles the North Carolina clients so he would assist in resolving debts if you joined the National Legal Systems' program.

I will be happy to provide you with more specifics via email if you wish to tell me more about your kind of debt and your circumstances. I can be reached at: [email protected].