HOW ARE DEBTS DIVIDED IN A DIVORCE?
There are many things to consider when ending a marriage, especially with regard to finances. While the issue of property division and assets is often discussed when it comes to divorce, the division of debts is just as important a topic. Determining who is responsible for debts is a key consideration for many Colorado couples parting ways.
Legal responsibility for debt can be determined by many factors. For example, the individual whose name is on the loan paper is a key consideration. So, too, is the date that the debt was taken out; specifically, if it was before or after the marriage. Finally, the intermingling of finances (or lack thereof) within the marriage can play a role in the legal designation; for example, whether the spouse was a co-signer or if it was a fully independent debt.
In general, the individual names on a debt are responsible for that debt. So, if there are two co-signees on the debt, it is a joint responsibility. Where it can become legally challenging is when just one spouse’s name is on the document. While separating assets and liabilities may sound easy to some, in practice it can be a difficult task.
When entering a marriage where debt was involved beforehand, or where significant assets are involved, a prenuptial agreement is often a good idea. However, these agreements typically do not stipulate what happens to debt accumulated after marriage. Protecting finances during a divorce can be legally complicated. Speaking with a lawyer about Colorado family law standards is a good place to start when considering these issues.