A fundamental part of divorce relies on dividing assets and debt is one of them. Untangling it can add stress to an already emotionally charged separation. In Colorado, there are straightforward rules for doing so. Here are some of them.
Is classification important?
In the state, either debts or assets are categorized under marital or separate.
- Separate debt: Debt incurred the marriage (like most student loans or pre-marital credit card debt) or debt incurred after a decree of legal separation
- Marital debt: Any debt that either one of the spouses acquires during the marriage.
Only marital debt is subject to division by the court.
Whose name matters in a credit card?
The short answer is: no one for divorce purposes. If one of the spouses has a credit card in their name but used it to pay for marital purposes, this will be classified as marital debts and will be divided. The purposes can include household bills and groceries but also activities such as family vacations.
Are equitable and equal the same thing?
Not really. Colorado follows the principle of equitable distribution. This means the court divides marital debt in a manner it deems fair and just, which will not necessarily be 50/50.
When allocating debt, a judge considers factors like:
- Earning potential: The higher-earning spouse may be allocated a greater percentage of the debt
- Associated assets: The debt usually follows the asset.
- Financial misconduct: Debt incurred for non-marital purposes (like supporting an affair or reckless gambling) may be allocated entirely to the spending spouse
Dividing debt can be overwhelming but it is crucial. If you do not know where to start, an experienced law firm can be helpful.