Property division is an issue that must be dealt with in every divorce proceeding but its importance will vary from one marriage to the next. And while couples are understandably curious about how their assets will be divided, there’s a tendency to forget about the other half of the equation: liabilities.
Property includes debt
Colorado law requires that all property owned by the spouses in a divorce be divided appropriately. That property includes any outstanding debts. A particular debt may be owned by either one spouse entirely or by both spouses. If it is owned by just one spouse, it is considered separate property and will remain with that spouse.
Separate debt usually refers to a liability that was incurred by one spouse before the date of marriage, but not always. A prenuptial agreement, for instance, can specify that a particular debt accrued during the marriage be owned wholly by one spouse. Separate debt can also refer to debt incurred after the date of separation but before the divorce is finalized.
Any debt which is not considered separate will be classified as marital debt and subject to equitable distribution. This means the debt will be divided between the spouses in a manner that the court deems fair. It could be an equal division, but not necessarily.
Just as it does when dividing assets, the court will consider any relevant factor to arrive at a just distribution of marital debt. The financial health of each spouse and how they contributed to a specific debt will be among the considerations.
Dividing debt can be just as complicated as dividing assets. To better understand how it will be handled in your divorce, speak to a professional who is experienced in Colorado family law and divorce.