How people divide credit card balances and debt during divorce

Equitable distribution rules determine what happens with marital property when Colorado couples litigate their divorces. If a judge must decide how to split people’s resources and financial obligations, they will aim to prioritize fair solutions based on the unique details of a marital relationship.

Those who are preparing for litigation or are trying to negotiate a settlement with their spouse will often focus on their assets. Marital real estate, retirement savings and other valuable property can become points of contention in a Colorado divorce. However, debt can also play a major role in the family’s financial circumstances and influence what should happen with their assets. For example, credit card balances and other debts accrued during the marriage can become a point of disagreement during divorce negotiations.

Different solutions work for different couples

One of the most common approaches to dividing debt in a divorce involves making each spouse responsible for a certain portion of the marital debt. They may each assume responsibility for repaying certain accounts. However, the risk in such arrangements is that either spouse might default on payments and damage the credit rating or financial resources of the other.

A credit card account that had both spouses as co-signers will remain the obligation of both spouses until repaid in full even if there is a property division order naming one spouse as responsible for that specific debt. For those with the resources to do so, repaying marital debts in full before the completion of the divorce so that there aren’t any commingled financial responsibilities moving forward can be the cleanest and most effective solution.

Not all debts are subject to division

There are very likely some debts that won’t be part of the marital estate. Amounts owed by either spouse prior to marriage or taken on as an act of dissipation may not end up divided and could become the responsibility of only one spouse.

For many couples, determining how much debt is marital property can be as important as putting together a workable solution for dividing the debt between spouses. Student loans, medical debt and balances owed to individual creditors may all be treated as marital debt even when only one spouse has their name on an account. Seeking legal guidance to learn more about property division matters may benefit those who are preparing for divorce proceedings in Colorado.