When a married couple decides to separate there are many things to consider, including child support, child custody and division of assets and property. Marital property divided during a divorce can include almost anything, from homes to cars to retirement accounts. As assets are divided, so are marital debts.
The question for many young couples in Michigan who are going through divorce is how educational debts or school loans are divided. When people get married, they are agreeing to share their lives in many ways and that may mean sharing this educational debt. The average student loan for college student degrees in 2012 was slightly less than $30,000. The truth is that this debt may outlive a marriage, especially, if both parties come in with student loans.
It is a commonly misunderstood fact, but educational debt brought into a marriage is usually considered separate property and, therefore, not marital property. That means that the debt forever belongs to the student that took out the loan.
After a marital separation, it may be difficult for one or both of the parties to support the loan payments on only a single salary. Post-divorce, a person may need to reallocate spending in order to avoid default on student loans.
The story looks a little different when a person takes out a school loan during marriage. This debt may be considered marital property and shared by both spouses upon divorce, but there are a number of varying factors that states and courts will take into account. Debt division may not always be cut and dry. A higher earning spouse may be required to help make payments in the form of spousal support after a divorce.
The best advice to avoid any unexpected surprises upon divorce is to fully discuss the extent of any debt before marriage. A Michigan family law attorney can also help sort out these issues during a divorce.
Source: The Wall Street Journal, “Who Is Responsible for the Student Loans After Divorce?,” Charlie Wells, April 13, 2014