How the Courts Will Handle Student Loans in a Colorado Divorce

When it comes to debt incurred in a marriage, student loans are likely rivaled only by mortgages. They are some of the most substantial debts people ever take on, and it may take many decades for any individual to pay off all of their loans.

The sad truth is, even if you don't finish your degree, you will still have to pay back every penny you borrowed with the hope of continuing your education.

The strain of student loan debt can impact the family's finances adversely. Sometimes, all of that strain can contribute to the breakdown of a marriage and lead to divorce. Student loans contribute to roughly one of every eight divorces.

If you have substantial student loans or your spouse does and you are considering divorce in Colorado, you probably want to know what the courts are going to do with all of that debt. While every divorce is unique, there are some factors you can consider to determine the most likely outcome in your case.

The courts are going to look at when you took on all of that debt

Colorado uses a community property standard for asset division in divorces. In other words, it looks at all debts and assets acquired during marriage as owned jointly by both spouses. Anything that you earned during your marriage is subject to division. The same is true of any debt that you acquire.

It does not matter whose name is on the account. So long as student loans represent an attempt to continue education and contribute to the household, the courts are likely going to consider those student loans marital debt. On the other hand, if you or your spouse had those student loans prior to marriage, they likely will not expect the other spouse to continue paying those debts.

The courts can split debt in a number of different ways

Although the law does require that judges take a certain approach, they have quite a bit of license when it comes to how they actually create a divorce order. Splitting up assets and debts often requires this kind of creative approach. After all, many assets cannot simply get cut in half and divided between spouses. The same is true of debts.

While it may be possible to allocate separate amounts of the debt to different parties, many times actually splitting the accounts will not be possible. The courts may need to consider other options for splitting things up fairly. They may offset the additional debt of the student loans by allocating additional assets or support to the spouse paying it.

However the courts approach it, it's important to present your side of the case carefully to reduce the risk of long-term financial consequences from student loan debt and the cost of divorce.