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What to know about dividing debts in a divorce

On Behalf of | Apr 27, 2021 | Divorce

Colorado law says that a divorce settlement won’t be accepted unless it is deemed to be equitable. This means that assets will need to be divided in a manner that allows both parties to the marriage to enjoy a reasonable lifestyle post-divorce. It also means that debts will be divided in a manner that is considered fair based on the facts of the case.

You’re typically not liable for debts incurred before the marriage

If your spouse owed $10,000 on a car loan that he or she obtained prior to the marriage, it will likely remain that person’s separate debt in a divorce. However, if you agreed to cosign for the loan, the lender could hold you liable for any late or missed payments.

You could be liable for marital debts in your spouse’s name only

In most cases, you wouldn’t be ordered to pay any debts incurred during the marriage that aren’t in your name. However, a judge might order you to pay such a balance if you are perceived to be in the best position to do so in a timely manner.

Do you have a custom marriage contract with your spouse?

A prenuptial agreement generally allows you to determine how debts are split in a divorce. If you don’t have time to execute such a document prior to your wedding, a postnuptial agreement can be used to accomplish this goal. Negotiating the terms of a divorce before the relationship ends may be an effective way to save time, money and your sanity. This is because it’s easier to negotiate a fair deal when you’re on good terms with your partner.

If you have any questions about how debt is handled in a divorce, don’t hesitate to speak with an attorney. A legal professional may also be willing to review a prenuptial, postnuptial or other type of agreement that you have previously negotiated with your spouse. Reviewing such a document prior to filing for divorce may provide insight into whether its terms are likely to be enforced by a judge.