You promised to stay with your spouse through sickness, health, and student loan payments. But sometimes, it doesn’t work out that way.
If you’re considering getting a divorce, remember that everything in the marriage must be split, whether it’s a debt or an asset. Student loan debt can be particularly tricky, so it’s important to know the facts in order to have a mutually beneficial divorce. Start by answering these questions to know how divorce affects your student loans.
1. When and where did you take on the debt?
If you or your spouse took out student loans before you were married, the debt is considered separate property. You are solely responsible for it.
However, if you or your spouse took out any debt while married, that debt is considered shared property and must be paid down by both parties. Besides student loan debt, this includes mortgages, car loans, personal loans, and credit card debt.
The state in which you live also has an effect on how debt is split. Most states are equitable distribution states, meaning that the property belongs to whichever spouse earned it or brought it into the marriage. For shared property, the court considers a variety of factors, including financial earning contributions, potential earnings, and the value of child care, when determining how to split the property.
Other states, like California, are community property states, meaning all property between the couple is split down the middle, regardless of what belongs to whom.
2. Have you ever consolidated your student loans?
If you consolidated your student loans with your spouse before 2006, you are responsible for paying your portion of the loan, as well as your spouse’s portion if he or she neglects to pay. However, this rule does not apply to marriages after 2006.
When it comes to figuring out how much student loan debt you’ll be responsible for after a divorce, much of it depends on your individual case as well as the state in which you live. More than 40 million Americans have student loan debt, so it’s not an unusual situation. For more information, contact the offices of Hoffman Divorce Strategies at (985) 674-1120.