January 12, 2013 /24-7PressRelease/
-- Why it is important to divide debts in divorce
Couples that are going through a divorce have to face the difficult task of dividing up debts that were incurred during the marriage. This task can be particularly hard because it is common for one spouse to incur debt during a marriage that the other spouse has nothing to do with. But when married, debts incurred during the marriage are "marital debts" and therefore can be apportioned between the spouses in the divorce. Therefore, Colorado residents should be sure to divide debts when getting a divorce.
Division of debts in Colorado
Colorado recognizes separate property. Generally, this means that assets and liabilities, which existed prior to the marriage, or are gifted to one spouse, or inherited, are treated as that spouse's separate property or debt. However for debts incurred during the marriage, even if the debt was incurred in the name of only one spouse, these debts may be assigned to one party or another, equitably by the Court. Many divorcing couples do not understand the complexity of how debts and divorce are related. For example, a creditor such as a mortgage holder or a credit card company, is not a party to the divorce, so the terms of a divorce decree apportioning debt to one party or the other are not binding on the original creditor. A qualified divorce attorney can help make sure that debts are fully resolved in the case. It is common for parties trying to do a divorce themselves to agree about debts, only to find that their agreement is not binding on the creditors and frequently there are unintended consequences. A prime example is that two spouses on a mortgage agree to remove one spouses name from the title, but fail to realize that has no effect on the other spouse's continuing responsibility for the mortgage.
During a divorce, a judge will determine how to split joint debts under the doctrine of equitable distribution. The judge will take many factors into consideration, including the duration of the marriage, the income of each spouse and what each spouse contributed to the marriage. The good thing about this process is that if one spouse has racked up a bunch of debt, the other will not likely be responsible for it, particularly if the debt was not related to the necessary expenses of the family.
Credit card companies do not care about people's marital status. They will not ask if one spouse is responsible for the debt. If both names are on the account, they will seek payment from either spouse. This could devastate the credit of the spouse who did not incur the debt. Becoming a single person with joint debt is a bad idea because each person could potentially be liable for the entire amount of the debt, regardless of who made the purchases. For example, if there is joint debt left over after a divorce and one spouse declares bankruptcy, creditors can still go after the other spouse for the entire amount of the debt owed. Parties to a divorce case also need to be aware that in most cases divorce orders regarding debts may make the debts non-dischargeable in bankruptcy by either party. Again a qualified divorce lawyer that understands the interaction with bankruptcy laws is essential to a workable resolution. This is why it is essential to try to leave your marriage with no joint debts if at all possible. If not possible, it is a good idea to make sure that the court order explicitly states which spouse will be responsible for paying the joint debt, so that if payments are not made, the spouse who is not responsible has some recourse.
Complexity of debt relief options
These situations can be very complex. Attorneys are aware that every situation is different and presents its own complications. They have experience with various cases and can be very helpful in coming up with solutions and guiding couples through the divorce process. The laws surrounding debt and dividing assets can be hard to understand, and couples may require assistance to navigate through all the options. If you are going through a divorce that involves dealing with debt, contact an experienced Colorado family law attorney to discuss the legal options that are available to you.
Article provided by Buchholz, McDowell & Norman, LLP
Visit us at http://www.bldrlegal.com---
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