We talk about student loans a lot when discussing bankruptcy, but did you know that this type of debt could actually come up during your New York divorce? For many younger couples today, part of getting married simply means that they will be taking on each other’s debt. Although some existing debt may be considered joint marital property, student loans generally do not fall into that category. That is, the person who incurred the educational debt will likely still be responsible for it even after a breakup.
This can be a very difficult transition for those loan payers who are used to receiving financial assistance from a spouse to pay for their loans. One young woman said that she experienced a major financial shift after divorcing her husband of two years. Dealing with the debt on her own after the divorce property division was more challenging than she expected. In fact, that woman, like many others, had to restructure her debt payment plans in order to make the loan repayment more affordable.
Generally, if student loan debt is brought into the marriage, it leaves with the person who owns it. However, debt division can be difficult when the loans are assumed during the marriage. Educational debt division may depend largely on the state mandates in your region. Further, that debt division could be different based on which partner benefited from the student loans.
Although most student loans are given back to the person who incurred them, some exceptions do happen. For example, a higher earner may be required to pay some spousal support to ensure that the other spouse is able to become financially solvent enough to once again make payments. Student loan debt, like other types of debt, must be carefully considered during a New York divorce property division phase.
Source: The Wall Street Journal, “Who Is Responsible for the Student Loans After Divorce?” Charlie Wells, Apr. 13, 2014