Who is Responsible for Student Loans After Divorce?

Posted by Steven D. Eversole | Aug 18, 2014 | 0 Comments

Student loan debt is becoming an increasing financial burden for young Americans. When you sign the original loan document, it may seem perfectly feasible to pay off that debt over years, even decades. But what happens to loan debt in the event of divorce? Who is responsible for paying them off? Can lenders turn to an ex-spouse for debts accrued before the marriage?

As with any debt or question involving marital property, the results can vary. However, there are some general rules when it comes to the distribution of student loan debt.

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Prenuptial agreements are one way to ensure  you and your spouse are on the same page about debt obligations. If you don't have a prenuptial agreement and are facing divorce, it is important to consult with an advocate who can review your debt history and protect your rights. Our Birminghamdivorce lawyers are experienced with helping clients protect their financial interests before a marriage, during a separation and after a divorce is finalized. We will take the time to review your assets, debts and income, understand your priorities and work toward an optimal outcome in court.

As with any assets or debts, it is important to determine which property is marital and which is separate. Generally, separate property will include property owned by either spouse before the marriage, inheritances, gifts, personal injury lawsuit settlements or prior debts. Marital property is everything else accrued during the marriage. Alabama is an equitable distribution state, meaning marital assets will be divided in a “fair and equitable manner.” To understand student loan debt at the time of divorce, here are some primary considerations:

Loan debt accrued before the marriage is not marital property. If you or your spouse took out a student loan before the marriage, that debt will likely stick with the original debtor. Lenders can only go after the borrower who signed the promissory note and lending contract.

Debts are divided in marriage the same as assets. Debt will generally be divided using the same “equitable distribution” standards. Marital debt may include car loans, mortgages, personal loans, or credit card debts.

Student loans incurred during the marriage may be considered marital property.If you and your spouse made arrangements to incur debt to finance an education, that debt may be considered marital property and shared at the time of divorce. Whether or not that debt is lumped into the rest of marital property depends on the circumstances.

The circumstances vary widely and will hinge on questions such as, what were the student loans used for and was the degree ultimately earned. In many states, professional degrees earned during a marriage are considered separate property. Thus, the debt is considered a separate debt.

However, some jurisdictions consider professional degrees to be marital property. Questions involving the division of assets and debts are always complicated. The results of your case will depend heavily on the individual facts. To best protect your financial interests, it is important to consult with an Alabama property division attorney who can advocate on your behalf.

Contact Birmingham divorce and family law attorney Steven Eversole at (866) 831-5292.

About the Author

Steven D. Eversole

J.D., Samford University's Cumberland School of Law, Birmingham, Alabama B.A., University of Alabama, Tuscaloosa, Alabama

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