Division of debt is one of the more complex issues in Colorado family law. It's also one of the most contentious. When couples share debt, even after divorce, that can keep them entangled with one another. Such situations can become messy.
If you’re pursuing a divorce, the idea of being held responsible for debts that you believe are not your responsibility can be frustrating. As always, information is your best tool. Let’s take a closer look at how the legal underpinnings of shared debt work.
Understanding the Difference Between Marital And Non-Marital Debt
Colorado Judicial Branch defines marital debt as "any debt that took place while you were married." Generally, it is viewed as the responsibility of both people. Just like marital assets, marital debt falls under the "Equitable Distribution" rule, meaning that it will be equitably distributed between the two parties.
Non-marital debt is debt that was either acquired before or after the marriage or for other reasons is seen by the courts as being the responsibility of just one party. Student loan debt, for instance, usually falls into this category.
How is Debt Responsibility Distributed?
First, any accounts that have your name on them, as well as your spouse’s are equally your responsibility. This is true for loans, utility bills, rental agreements, credit cards, etc. It does not matter if you have never used any funds relating to these debts, or received any products or services. Creditors may seek payment from you just as they could your spouse.
What about debt that is not in your name? Is that your responsibility? The answer is that it depends. Generally, if there is debt that is undertaken as part of efforts to provide food, shelter, taking care of children, or otherwise in support of the marriage and household, that is considered to be marital debt. It does not matter if your name is on that debt or not.
What Factors The Colorado Courts Considers During Debt Distribution
As mentioned already, Colorado courts generally want to divide marital debt equitably. However, that does not necessarily mean a 50/50 arrangement. If the divorce case goes to court, the judges will likely take the following factors into account:
- The personal, professional and financial circumstances of each party
- The duration of the marriage
- The circumstances under which either party incurred the debt
- The amount of marital assets, child or spousal support payments that either party has been awarded so far to either party.
To correctly classify the debt and make rulings, the court will try to determine when the debt was incurred, and why. For instance, if the courts find that debt was taken on selfishly, secretly, or as part of marital misconduct during the marriage, they may rule that debt is solely the responsibility of one party.
What if My Ex Defaults?
Unfortunately, creditors are not obligated to abide by the decisions of a family court. If your name is on a debt, they can come after you. However, if there is a divorce agreement in effect, you can then sue your ex for contempt. The court may order them to pay or liquidate assets to cover that debt.
Negotiating Shared Debt
The good news is that a qualified divorce attorney can help you to negotiate your debt liability as part of your divorce settlement. If you believe there is debt that you should not be held responsible for, they can use the resources available to them to help you investigate the matter, and present a case on your behalf. Marital debt is also an issue that can be tackled during mediation. This could lead to a mutually favorable agreement on the way that debt is distributed.