Financially complex divorces are rarely all assets. The same household that owns a business, two properties, and a brokerage account usually carries a mortgage, a home equity line, a business credit facility with personal guarantees, and a tax bill that has not yet come due. Colorado law treats those liabilities as part of the property division, allocates them under the same statute that divides the assets, and then leaves both spouses exposed to a fact the decree cannot change: the creditor never agreed to any of it.
This article covers how Colorado classifies and allocates debt, and then the specific problems that come up most often in Denver-area cases with real money on both sides of the ledger.
Marital Debt Is Defined by the Calendar
C.R.S. § 14-10-113 never uses the word "debt," but Colorado courts have read it in for nearly fifty years. Under In re Marriage of Femmer (1977), marital liabilities are all debts either spouse incurs during the marriage. Debt that predates the wedding is separate, and debt incurred after a decree of legal separation is separate, mirroring the rules for assets.
Whose name is on the account does not matter, and neither does what the money bought. In re Marriage of Capparelli (2024) made the point sharply. A husband drew on a line of credit during the case to fund what the trial court found was spending "far in excess of any reasonable needs." The trial court labeled part of that balance his separate debt. The Court of Appeals reversed: the character of a debt depends on when it was incurred, and a debt incurred during the marriage is marital, even one run up after separation. The court could allocate all of it to him; it could not take it out of the estate.
Debts incurred during separation but before the decree are marital under In re Marriage of Burford (2001), including student loans taken out during a pre-decree separation (In re Marriage of Morton, 2016). Debt run up after filing is marital too, but it collides with the automatic temporary injunction under C.R.S. § 14-10-107(4)(b), which restrains both spouses from "transferring, encumbering, concealing, or in any way disposing of" marital property outside the usual course of business or the necessities of life. A new credit line drawn to fund litigation or a new lifestyle is exactly the encumbrance that provision targets, and the court can allocate it to the spouse who created it.
How the Court Allocates It
Allocation is mandatory. Under In re Marriage of Speirs (1997) and In re Marriage of Jorgenson (2006), the court must apportion marital debt "in the same manner" as marital property, though not necessarily in the same proportion. The same four statutory factors apply: each spouse's contribution, the property set apart to each, their economic circumstances when the division takes effect, and changes in separate property.
In practice, judges ask who benefited from the debt, who can pay it, and who caused it. In re Marriage of Wright (2020) affirmed dividing marital debt in proportion to income where one spouse earned far more than the other. Speirs allowed the court to assign a wife's law-school loans entirely to her even though they were marital, because she kept the degree. And Jorgenson permitted the court to load a contingent business liability entirely onto the husband whose concealed decisions created it. Economic fault is a legitimate reason for an unequal allocation of debt even though marital misconduct is not.
A round-number example: $200,000 of joint credit-card and line-of-credit debt, a husband earning $300,000 and a wife earning $60,000. A judge could allocate $160,000 to him and $40,000 to her and offset the difference with assets, or leave the split equal and adjust maintenance. Both are within the court's discretion.
The Decree Does Not Bind the Bank
This is the part clients least want to hear. A divorce decree is an order between two spouses. The lender, the card issuer, and the IRS were not parties and are not bound. If the court assigns a joint credit card to your former spouse and they stop paying, the creditor collects from you, reports the default on your credit, and has no obligation to read the decree. Colorado's family expense statute, C.R.S. § 14-6-110, adds that expenses of the family are chargeable to the property of either spouse, so even some individually held accounts can reach both.
Bankruptcy makes it worse. A spouse's obligation to a former spouse arising from a divorce, including a promise to pay a joint debt and hold the other harmless, cannot be discharged in Chapter 7 under 11 U.S.C. § 523(a)(15). It can be discharged in a completed Chapter 13 plan. A former spouse who files Chapter 13 and walks away from the debts the decree assigned to them leaves the other spouse holding the joint obligation with no one to collect from.
The practical response is structural. Pay off joint unsecured debt from marital assets before the decree wherever possible. Close joint accounts and freeze home equity lines during the case. Where a debt must survive in both names, refinance it into one name on a deadline and secure the other spouse's obligation with a lien on property they are receiving.
Then pair every allocation with an indemnification and hold-harmless clause: the assigned spouse pays the debt, reimburses the other for anything the other is forced to pay, and bears the fees spent enforcing it. A useful clause names each debt by creditor and account, sets deadlines, requires proof of payment or refinance, and provides for contempt and an offset against any sums still owed under the decree. The clause does not bind the creditor either, but it gives the paying spouse a judgment-backed claim that survives the former spouse's Chapter 7 filing. That is the most protection Colorado law can offer against a debt the court cannot erase.
Mortgages, Guarantees, and Tax Debt
Mortgages are the largest joint debt and the easiest to mishandle. The spouse keeping the house should be ordered to refinance within a fixed period, commonly measured in months, with a sale required if the refinance fails. The departing spouse should not sign a quitclaim deed until the refinance closes; deeding away the house while staying on the note is the worst position in the case. Federal law generally bars a lender from using a due-on-sale clause against a transfer between spouses under a divorce decree, but nothing about that transfer removes the departing spouse from the note.
Personal guarantees on business debt follow their own rule. Under Jorgenson, a guarantee is a marital debt that must be valued if there is a quantifiable likelihood it will be called, even though it is contingent. The court has three tools, borrowed from pension law: assign a present value now, decide the split now and apply it later if the liability matures, or reserve jurisdiction to allocate it later. The non-owner spouse should push for a release from the lender at the time the business is awarded, or for an indemnity secured by the business itself when a release is unavailable.
Tax debt on joint returns is joint and several to the IRS regardless of what the decree says. Under In re Marriage of Lafaye (2003), the court may nonetheless apportion the liability between the spouses, in that case in proportion to each spouse's earned income for the year, and may bar a spouse from amending prior joint returns. A spouse who signed returns without knowing about the underreported income should ask about federal innocent-spouse relief before the decree, not after the notice arrives.
Talk to a Denver Divorce Attorney About Dividing Debt
Aaron Herzberg is a divorce attorney in Greenwood Village, Colorado, serving Denver and the Front Range, with more than 30 years of trial experience and a practice focused on divorce, custody, and financially complex family law. Debt allocation is where settlement agreements fail years after the decree, so the structure of refinancing deadlines, releases, and indemnities deserves as much attention as the asset schedule. A first meeting is a paid consultation, not a free call and not a sales pitch.
Read the full guide on DenverDivorce.com: Property Division in Colorado.
Educational information only, not legal advice. Reading this article does not create an attorney-client relationship.
