The division of marital wealth is a significant part of many a divorce. However, not everyone understands how things work, more so when it comes to apportioning debt. Yet, the financial obligations you will have to shoulder when the divorce is crucial in planning for the future.
Here is what you need to know about debt division in your divorce.
Colorado is an equitable distribution state
The debt incurred and assets acquired during a marriage constitute the marital estate. In Colorado, the division of the marital estate is done equitably. Assets and debts are treated equally.
Usually, the court will consider various factors before deciding each spouse’s portion of the marital debt. Some of the things that will influence debt division in your Colorado divorce include:
- The economic circumstances of each spouse
- Any change in the value of either spouse’s separate property
- Each spouse’s monetary or non-monetary contribution to the acquisition of marital property
- The amount of property each spouse ends up with
You may not end up with equal debt with your ex, as the court will aim for an equitable division of existing marital debt.
You may still be liable for debts assigned to your ex
It is important to note that divorce does not legally release you from financial liability. Creditors can still come after you if you were a signatory to a non-performing debt that is now under your ex. Additionally, should your ex declare bankruptcy, you may be the sole debtor liable for debts you took together.
Therefore, it is worthwhile to understand what you can do to negotiate debt liability and protect your financial interests during divorce. It will give you peace of mind knowing that you are no longer answerable to your ex-spouse’s debt should they default.