Married couples usually share their income and good fortune with one another. They also tend to take responsibility for one another’s financial obligations as well. Married couples who decide to divorce usually have to negotiate terms addressing any income and property they acquired during the marriage.
They may also have to make decisions about how to handle any debts that they took on during the marital relationship. Certain debts, like credit card balances and mortgages, may have both spouses as cosigners. There is little question about the shared obligation to handle those debts.
On the other hand, there may be numerous financial accounts that are solely in the name of one spouse or the other. There could then be questions about whether the other spouse has any personal responsibility for those debts when the couple divorces. Student loans in the name of one spouse could put a lot of pressure on the budget of the couple during the marriage. Do they also have to share responsibility for those loans after they divorce?
Timing is critical when dividing debts
Obviously, a spouse who co-signs a student loan is usually responsible for helping ensure that the other spouse pays what they owe. However, even if the student loans are only in the name of one spouse, there could still be shared responsibility for those financial obligations when the couple divorces.
If people took on their student loans during the marriage or refinanced their student loan debts during the relationship, they may need to include the marital debts in the inventory of shared property and financial obligations. The student loans may influence how the courts equitably divide other resources.
Particularly in scenarios where one spouse finished their degree and then used it to support the family, they could have a very clear case for asserting that the student loans are part of the marital estate. In some cases, spouses can negotiate terms that they both agree are reasonable given their personal financial circumstances and the issues leading to the divorce.
Those who review student loans carefully may be able to validate what balance is marital and what portions they could potentially exclude as separate financial obligations. Those worried about large student loan debts and other financial complications may need help as they prepare for an upcoming divorce. Learning more about equitable distribution rules can help people facing property division negotiations achieve a fair outcome.