We live in Colorado. My spouse borrowed $100,000 in student loans solely in their name while living here, but received no degree or certificate. A small amount of this money may have been used for family debts/support, although they were employed, and making enough money to cover almost all of their half of the monthly expenses with that income. Other things, like cosmetic surgery and trips were purchased during this time as well leaving the impression that student loan money must have been used since income alone did not cover their entire half of the bills.
Based on Colorado laws how would this debt be divided or to whom would it be awarded? Also, if it is divided between the parties, how is the payment to the lender structured and is there any type of recourse for the non-student spouse?
Divorce / Separation Lawyer
In Colorado, for purposes of making property division upon dissolution of marriage, marital liabilities include all debts which are acquired and incurred by husband and wife during their marriage. C.R.S. § 14-10-113(1)
This issue was specifically addressed by the Colorado Court of Appeals in the case of In re Marriage of Speirs 956 p.2d 622 Colo. App. where the court held "treating student loans contracted during marriage as marital debts in no way forecloses the trial court's ability to award such debts to the spouse actually incurring them. Rather, removing such debts from the class of separate liabilities enhances the trial court's ability to enter the most equitable distribution of the marital estate based upon all of the circumstances affecting the parties' situation at the time of dissolution.
We, therefore, hold that the unpaid student loans obtained by wife during the marriage are marital debts."
The Court retains complete discretion to divide this debt equitably.
Your wife remains directly responsible for the debt to the lender. Any order given by the divorce court will not release the debtor spouse of laibility if the other spouse fails to pay any amounts ordered.
Suzanne's answer is correct, but you need to note that the courts do have at their discretion the power to allocate marital assets and debts "equitably", which does not necessarily mean "equally." They may very well decide to do that in this situation, if you present the argument correctly.