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What Happens to Marital Debt After a Divorce in Colorado?


The law in Colorado classifies all assets and debts accumulated during a marriage as marital property. In a divorce case, the courts have the jurisdiction to divide marital property. The courts in Colorado do this using the law of equitable division, meaning a judge will split marital property according to what is fair. Understanding what happens to marital debt after a divorce in Colorado takes analyzing your specific circumstances.

Is the Debt Separate or Marital Property?

Under Colorado’s equitable division law, the courts will divide debt in a way that is fair depending on each spouse’s financial situation. The courts will only have the legal right to divide marital property, however, not separate property. Marital property is anything acquired by either or both spouses during the marriage. Separate property, on the other hand, is anything acquired by just one spouse prior to the marriage or after the date of legal separation.

A common misconception is that debt created in only one spouse’s name during a marriage, such as a spouse taking out a credit card in his or her name, will automatically be classified as separate property. This is not necessarily the case. Most debts accumulated during a marriage are classified as marital property, even if the account is only in one spouse’s name.

Any debt your spouse acquired prior to your marriage, including credit card debt or student loans, will remain his or her separate debt. In a divorce, you will not be obligated to share a portion of your spouse’s separate debt. Any debt acquired during the course of your marriage, however, will be subject to division, meaning you could absorb a portion of marital debt even if you were not the person responsible for acquiring the debt.

How Can You Protect Yourself From Your Spouse’s Debt After a Divorce?

If the divorce court assigns you a portion of your spouse’s debt in a property division agreement as part of your marital property, this could give you an added financial responsibility after you dissolve your marriage. The debts acquired in a divorce could also hurt your credit score. Certain legal strategies, however, may protect you from financial harm.

An attorney may be able to help you remove your name from a loan through a tactic such as refinancing. Your lawyer may also be able to arrange to pay the lender in full to protect your credit score. If this is not possible, your lawyer can help you liquidate the assets you have and use them to pay the debts or to create a more lucrative settlement with your ex-spouse. If the two of you can reach a settlement, you can avoid going to trial and having a judge divide assets and debts for you.

Another approach is to protect yourself with a prenuptial or postnuptial agreement before a divorce. If you are engaged or recently married and not yet considering divorce but concerned about protecting yourself from absorbing your spouse’s debts, consider using a prenuptial or postnuptial agreement to protect yourself from becoming liable for your spouse’s debts.

What If Your Ex-Spouse Declares Bankruptcy?

You will not automatically be absolved from your marital debts if your ex-spouse declares bankruptcy. In fact, a bankruptcy declaration by your ex-spouse could put you further into debt by making you the sole debtor liable for all marital debts. Your ex-spouse’s creditors could then turn to you for repayment. Unless you also declare bankruptcy, your ex-spouse doing so will only protect him or her from financial liability.

Understanding the division of marital debt after a divorce in Colorado, as well as protecting yourself from potential financial ramifications, may require assistance from a divorce attorney. Consult with a lawyer from The Law Office of Stephen Vertucci, LLC today for more information about how to protect yourself from marital debt.

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