June 22, 2018

Colorado Court of Appeals: Student Loan Debt Improperly Characterized as Income for Maintenance Determination

The Colorado Court of Appeals issued its opinion in In re Marriage of Morton on Thursday, January 14, 2016.

In this dissolution action, husband and wife were married for approximately six years. During the marriage and after the parties separated but before permanent orders entered, wife attended school to become a radiological technologist and later took a sonogram course. She took out student loans for her schooling. In dividing marital property, the trial court concluded that wife’s student loan debt was her separate debt because it was incurred after the parties’ separation and it was not “fair or equitable” to treat the debt as marital. Wife contended this was an abuse of discretion, and the court of appeals agreed, finding any debt incurred during a pre-decree separation was marital. The court remanded for the district court to first treat the student loan debt as marital and then decide equitable distribution as part of the overall property distribution.

Wife also contended the trial court erred by considering her student loans a financial resource in determining the maintenance award, and the court of appeals again agreed. By considering the loan proceeds as income, the trial court ignored the need for the loans to be repayed with interest. The court determined that by allowing loan proceeds to be counted as income, the trial court thwarted the purpose of the maintenance statute. The court of appeals remanded for reconsideration of the maintenance award without considering the student loans as a financial resource or income of any kind.

Wife further contended the trial court erred in determining the maintenance award before fully dividing the parties’ marital and separate property, and the court of appeals again agreed, noting that the maintenance award depends on its findings and order dividing property. Without first dividing the property, the court cannot reasonably determine the requesting party’s maintenance needs.

Because the court remanded on the issues of maintenance and the division of marital property, it set aside the trial court’s attorney fee award. On remand, after dividing property and determining a maintenance award, the trial court could reconsider an award of attorney fees. The court of appeals instructed the trial court to base its decision on the parties’ financial circumstances at the time of remand.

Print Friendly, PDF & Email

Speak Your Mind

*