How Divorce Affects Your Student Loan Debt

Managing your finances after a divorce is stressful, particularly if you find yourself taking on a substantial amount of debt. If you have student loans, you are likely wondering if you’ll be stuck footing the entire bill or if your ex-partner will be responsible for some of your debt.

Learn more about how your divorce may impact your student loans, and for more personalized advice regarding your divorce, call Haygood, Cleveland, Pierce, Thompson & Short at 334-821-3892.

Student Loans and the Division of Debt

Alabama, like most other states, is not a community property state. This means that debts and assets accumulated during the marriage are not split 50/50 but are divided in a fair and equitable way. Even if you took out the majority of the student loans, your ex-partner may still have to pay some of them, depending on when you signed for them. Much depends on how much you each earn, how capable you are of repaying the debts, and how other assets and debts are split up.

When You Took Out Your Loans

A big part of the equation is when you took out your student loans. If you signed for your student loans before you got married, they are considered your own separate debts. You are responsible for them before, during, and after the marriage. You should not expect them to be divvied up during the division of assets and debts during your divorce.

On the flip side, your student loans may be considered joint debt if you signed for them during the course of the marriage. This is true even if you are the only person who signed for them. The court will consider the student loans the same way it considers all other joint debt, such as your mortgage, credit cards, personal loans, and other obligations.

Co-Signed Student Loans

If your ex-partner co-signed on your student loans, they are already on the hook for them legally. That will not change after divorce—divorce does not dissolve financial obligations created by taking on debt together. However, as part of your divorce settlement, you may have to refinance your loans, so they are exclusively in your name. This is common if you are going to be solely responsible for paying them.

Changes in Income

Changes in payment amounts are largely only an issue with federal student loans, which allow borrowers the chance to adjust their payment amounts based on their income. This may be beneficial to you if your ex-partner earns considerably more than you.

Once you divorce and you file your taxes as single, you may apply for income-based repayment plans that only consider your income. For many people, this leads to a significant decrease in monthly payments. However, keep in mind that anything left unpaid after 25 years is forgiven and taxed as taxable income.

How Student Loan Companies View a Divorce Settlement

If you and your spouse end up splitting up your student loans, you might be curious about what you should do if they refuse to make their payments. Your divorce decree may state that your ex-partner is to continue making payments until the loan is paid off, but that agreement is between you and your ex-partner—not between the loan company and your ex-partner. If your ex-spouse, either out of spite or not having the money, stops payments, the loan company will come after you.

Even if you show them the divorce decree that makes your ex-spouse responsible for your payments, the loan company will still expect you to make payments if payments are missed. In this case, you would need to make payments to protect your credit and then take your ex-spouse to court for contempt and to recover the money you put into their missed payments. This is something to consider throughout this process, as the added stress is not worth it for some people.

Plan for Your Divorce with Haygood, Cleveland, Pierce, Thompson & Short

Divorce may not ever be easy, but it can be easier when you have the right legal team on your side. At Haygood, Cleveland, Pierce, Thompson & Short, we focus on aggressively advocating for every single client during this difficult time. Schedule a meeting now by contacting us online or calling us at 334-821-3892.

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