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Impact of divorce on student debt

| Jun 19, 2019 | Asset Division

A divorce is often one of the most difficult processes a person can go through. It can be emotionally, mentally and financially draining, and it can raise a lot of questions about the division of assets and liabilities. People who are going through a divorce in North Carolina might have questions about how property is likely to be divided. If one or both of the parties has student loans, the division of that liability can complicate the proceedings.

Generally speaking, if one of the spouses incurred student debt prior to the beginning of the marriage, the debt is the responsibility of that person alone and not of the other spouse. Cases may be more complicated where student debt came on during the marriage. It may then be considered marital debt and the family court will usually divide it between the parties based on the principle of equitable distribution.

The court may consider any number of factors in coming to a conclusion regarding equitable distribution, but the most common one that are considered include how the money was used, the role of the non-student spouse and relative earning power. If student loan money was used to cover the couple’s living expenses, for example, the court is more likely to find that it is shared debt. In cases where the non-student spouse supported the other during school, the court might find no further obligation.

If one party to the divorce has better earning power thanks to the education, the court may be less likely to find the lower-earning spouse liable for student debts. The Piedmont Triad Asset Division Blog might be helpful for people who have questions about property division or the impact of divorce on credit. An attorney might be able to negotiate important terms with the other spouse or advocate on the client’s behalf during court proceedings.