MIAMI, Florida. As a general rule, debts incurred during your marriage will be considered shared debts. This means that both you and your ex could be held liable for paying those debts and the debts may be subject to division during your divorce. When it comes to credit card debts, mortgages, car loans, and other lines of credit opened during your marriage, this may seem straightforward enough. But what happens if your ex took out student loans during your marriage? Should you be held responsible for paying a debt that will only benefit your spouse?
According to the New York Times, Americans hold an estimated $1.4 trillion dollars in student loan debt. For many people, these debts can be crushing, sending some into default, and limiting others’ ability to purchase homes or cars. Not only are students taking on loans, but parents are also taking on parent PLUS loans to help pay for their children’s educations.
Student loans can put pressure on any family, but they can create additional questions during divorce. Are student loans taken out during a marriage considered community property? Are they subject to division? According to Forbes, it depends on your situation. If the student loan was used to pay for school fees and books, then it won’t be hard for you to show that your ex alone will benefit from the loan. However, if the loan money was used to pay for household items, living expenses, and rent, then both parties could be seen as benefiting from the loan, and therefore both parties may be responsible for paying the debt.
Interestingly, some states consider degrees earned to be marital property. New York is one of these states. However, many states consider degrees solely owned by the person who earns it. In this case, loans taken out to earn the degree will belong solely to the partner benefiting. However, in cases where degrees are considered marital property, the spouse without the degree might still be able to benefit even if they have to pay the student loan burden. How? The spouse may be entitled to alimony for the additional earning power an ex has due to the degree.
Who benefitted from the degree can also be a big question when it comes to who owns the debt. If your ex divorces you right after incurring massive student loan debt and you didn’t benefit from his or her added earning power, then you might be absolved from being responsible, but if your ex went on to be a successful doctor and this allowed you to purchase a nice home together and increase your collective savings and net worth, the courts might find you partially responsible for the debt.
Finally, when considering how you’ll divide assets and debts during divorce, it is important to consider the tax implications of student loan debt. Student loan borrowers in repayment can enjoy tax benefits.
If you’re getting married and have student loan debt or if you are getting married while your partner is in school, what can you do to protect yourself? More couples are drafting prenuptial agreements that clarify who owns the debt. If you have questions about how your debts will be divided during divorce, consider speaking to Sandy B. Becher, P.A., a divorce lawyer in Miami, Florida. Our firm can review your financial situation, determine who benefited from the degree, and help you find a resolution to your divorce financial questions. Visit us at https://sandybecher.com/ to learn more.
Sandy B. Becher, P.A.
201 S. Biscayne Boulevard
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Miami, FL 33131