Are you concerned about how Colorado law handles debt in a divorce? You’re not alone. Many couples grappling with the end of their marriage find themselves equally concerned about dividing their debts as they are about splitting their assets.
At Perkins Law, we understand the complexities of debt in a divorce and are here to guide you through this challenging process.
The Intertwining of Assets and Debt in a Divorce
When it comes to debt in a divorce, many of the same principles that govern asset division in Colorado also apply. It’s crucial to understand that the items you’ve acquired during your marriage – the house, the cars, the furniture – often come with associated debts. And while you might be eager to claim certain assets, remember that the corresponding debts will also need to be addressed.
Here’s a key point to remember: Creditors don’t care about your divorce. They care about getting paid. That’s why dealing with debt in a divorce is just as important as dividing your assets.
Related: A Divorce Lawyer vs. a Divorce Mediator: Making the Right Choice for Your Colorado Springs Divorce
Marital Debt vs. Separate Debt: Understanding the Difference
When dealing with debt in a divorce, the first step is determining which debts are “marital” and which are “separate.” This distinction is crucial because it determines how the debt will be handled at the end your marriage.
- Marital Debt: These are liabilities that either spouse acquired during the marriage. Even if only one spouse signed for the loan, if it was taken out for the benefit of the couple, it’s considered marital debt.
- Separate Debt: These are obligations that preceded the marriage. They remain the sole responsibility of the spouse who incurred them.
For example, if your spouse financed a car before your wedding day, that debt remains theirs alone. However, if the car was purchased and financed during your marriage, it becomes part of the marital debt – and therefore will be addressed as part of the settlement.
Debt Acquired During Divorce Proceedings: A Gray Area
Here’s something many people don’t realize: Debt in a divorce isn’t just about what you owe when you decide to split. Any charges acquired after separation but before the final divorce decree is signed can still be considered marital debt.
However, there are exceptions. If one spouse racked up significant debts without the other’s knowledge or used credit for personal indulgences, such debt will likely remain their sole responsibility.
How Colorado Law Handles Debt in a Divorce
In Colorado, we follow the principle of “equitable distribution” when it comes to dividing both assets and debt in a divorce. But don’t be fooled by the word “equitable” – it doesn’t necessarily mean “equal.”
Instead of a simple 50/50 split, Colorado Springs judges consider several factors when determining how to distribute debt in a divorce fairly. These factors include:
- Each spouse’s contribution to acquiring marital property
- The value of the property awarded to each spouse
- Each spouse’s economic circumstances at the time of the division
- Any increases or decreases in the value of separate property during the marriage
Remember, debt and assets are often two sides of the same coin. The court can’t consider how to divide your debts without also looking at how your assets are being allocated.
When Debt Follows an Asset in Divorce
Often, debt in a divorce follows the asset it’s attached to. For instance, if you keep the family car in the divorce settlement, you’ll likely also keep the car loan. This approach not only seems fair but also simplifies things by eliminating the need to rely on your ex-spouse for payments.
After all, no one wants to wake up and find their car repossessed because their former spouse failed to make payments, whether due to negligence or spite.
Debt in One Spouse’s Name: A Common Misconception
Here’s a question we often hear: “What happens if one spouse obtains debt in only their name while married?”
You might think that debt in your spouse’s name is their problem alone. But in Colorado, that’s not always the case. Here’s the deal:
Any debt acquired during the marriage – whether under your name or your spouses – is typically considered marital debt. This means that even if your spouse took out a loan or credit card in their name alone, you could still be held partially responsible for that debt in a divorce.
But don’t panic just yet. There are some exceptions:
- If the debt was incurred for non-marital purposes (like funding an affair or a gambling addiction), it might be considered a separate debt.
- If you can prove that you had no knowledge of or benefit from the debt, a court might assign it solely to your spouse.
- If you have a prenuptial or postnuptial agreement that specifies how debt should be handled, that agreement could override the general rule.
Here’s a crucial point to remember: While Colorado law may assign the debt to one spouse in the divorce decree, this doesn’t change the contract with the creditor. If your name is attached to the debt, the creditor can still come after you for payment, even if your ex-spouse was ordered to pay it in the divorce.
Why You Need a Good Lawyer for Handling Debt in a Divorce
Navigating debt in a divorce can be complex and emotionally charged. That’s why having an experienced Colorado Springs divorce attorney on your side is crucial. At Perkins Law, we have the experience and tenacity to protect your interests and ensure a fair distribution of both assets and debts.
We understand that no one wants to take on more debt than necessary. Our team will ensure that the allocation of debt in your divorce is fair and equitable, taking into account all the unique aspects of your financial situation.
Take the Next Step with Perkins Law
At Perkins Law, we’re more than just your attorneys – we’re your partners in navigating this challenging life transition. Let us help you secure the best possible outcome for your future, ensuring that debt doesn’t hold you back as you move forward. Whether it’s a joint credit card, a mortgage, or a loan in your spouse’s name, we’re here to help you understand your rights and options. Don’t let the complexities of debt in a divorce overwhelm you – reach out to us today, and let’s start building your path to a happy future.
Contact Perkins Law today for a free consultation.
