How to Avoid Getting Stuck With Student Loan Debt During Divorce

7 August 2015
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When you separate from your spouse, the assets aren't the only things that get distributed between the two of you. The debts accumulated during the marriage—and sometimes ones that came before—are also doled out to you and your ex-spouse. One bill you want to avoid getting, however, is student loan debt because it is the most difficult to deal with and cannot be purged in bankruptcy. Here are a few tips for reducing the possibility of having a family court judge lay those education loans in your lap.

Differentiate Between Debt Incurred Before and During Marriage

In general, any debts incurred before the marriage will be the responsibility of the person who acquired them. Therefore, if your spouse took out student loans before you were married, then you could successfully argue that you shouldn't be held responsible for them because you had nothing to do with obtaining them regardless of whether or not you helped pay on the loans during the marriage. The only time a judge could hold you liable is if you co-signed on the loans or added them to a debt consolidation plan or loan during the marriage.

Student loans that were obtained during the marriage, however, may be more difficult to challenge. Some states, such as Arizona and California, have community property laws that essentially make all debts accrued during the marriage the responsibility of both parties. Even if the student loans are in your ex-spouse's name, you could be held liable for paying some or all of it. In this case, you may be able to avoid getting stuck with the debt if you can convince your soon-to-be ex-spouse to sign an agreement eliminating your responsibility for the loans.

However, most states are common law property states, which means the courts will distribute the debts based on several factors, not the least of which is who signed for the debt. In these states, the court will likely pass the student loans to the person whose took them out. If both of your names are on the loans, then you'll need to use other tactics to reduce or eliminate your liability.

Convince the Judge You Can't Afford the Payments

One tactic is to show the judge you don't have the money to repay the student loans. This only works in situations where you and your spouse would both be on the hook for the debt such as if you lived in a community property state or co-signed for the loans. Additionally, you have a better chance of getting the judge to shift most or all of the student loan debt to your spouse if you can show he or she has significantly more income or assets than you. If your incomes are equal (or close to being so), then the judge may simply split the debt down the middle.

Show Only Your Spouse Benefitted From the Money

Another thing you can do is show you didn't benefit from the loans. For instance, if your spouse used the money for books, tuition, and other things that only helped him or her, then the judge may be more willing to shift that debt onto that person. On the other hand, if your spouse used some of the money to pay for family expenses such as rent and food, then you could be required to help pay the loan back since you benefited from the money.

Be aware, too, that the judge will also consider whether or not you benefitted from the education the loans paid for. For instance, if your spouse was able to get a better-paying job as the result of going to school, then you may be put on the hook for at least part of the loans since you obtained some of the advantages that resulted from your spouse getting the money.

Offer to Take Other Debt in Exchange

A third option is to offer to take other debt instead of the student loans. For instance, you can offer to pay off the credit cards in exchange for your spouse taking the student loans. The advantage here is you can discharge credit card debt by filing for chapter 7 bankruptcy. On the other hand, student loans are non-dischargeable, and the government will even take you tax refunds to pay the debt if you fall behind.

For more tips on avoiding being saddled with students loans in a divorce, connect with an divorce attorney in your area.