There are two ways we have seen student loan debt affect divorce proceedings. One scenario is actually where the divorcing spouse, usually a newly-minted professional, has accrued a significant debt balance well into the six-figures; as much as $200,000 within the case of a medical degree.
The various other is actually where the student children of a divorcing couple have accrued the debt along with one or both of the parents has co-signed on the loan. These days, there are no job guarantees whatsoever for the graduates, regardless of their GPA or skill set.
When an engaged couple with student loan debt begins to plan for marriage, those plans often include addressing one or both partners’ student loan debt. If either spouse has significant debt, a prenuptial agreement should be considered.
A prenuptial agreement is actually a contract entered into by both partners, each with independent legal counsel along with review, following a full-disclosure of all assets along with liabilities. This kind of agreement is actually triggered by the death of either party or a divorce.
One of the primary considerations in a situation featuring significant student loan balances, is actually whether marital funds will be expended to pay back a student loan. Another important factor for consideration is actually whether one spouse supports the various other while a professional degree is actually earned during the marriage however also where that will degree is actually financed through student loans.
A prenuptial agreement can address these issues. Both existing along with inchoate debts can be covered within the scope of the agreement.
within the various other scenario arising with some frequency these days, a spouse co-signs a student loan for one of the couple’s children. If the student is actually unable to begin doing payments after the grace period expires, the co-signing spouse becomes liable along with This kind of is actually a marital debt issue within the divorce.
Generally, the student loan debts of a couple’s emancipated children are not marital debts within a divorce proceeding. Only when a parent co-signs does This kind of become problematic, especially when the co-signing parent is actually not the primary bread-winner. Who pays back that will debt if the student cannot?
Before a parent co-signs on a student loan, some thought should be given to the overall health of the marriage along with whether This kind of is actually wise to complicate the marital estate with such contingent liabilities.
If you are struggling with such issues, our law firm offers a free consultation that will can provide you with some guidance with these tough decisions.
Side Note: Here is actually a link to a post by the Law Blogger by last summer on a related student loan issue.