Tag: Student loan marital debt

Divorce Fraud: Student Loans

Posted by Ron Kauffman on

This is kind of scary for Halloween. Market Watch has an interesting article about a husband who paid off his wife’s student loans during their very short marriage, and his wife thanked him by filing for divorce after a mere 24 months of marriage. Was the husband the victim of divorce fraud, and tricked into paying off his wife’s student loans?

divorce fraud

Tricked or Treated?

As the Market Watch article reports: “[b]efore I married my wife two years ago, she had huge amounts of debt to her name, including large amounts of student loans. After we married, we diligently almost paid everything off, helped by my salary being three times that of my wife.”

She recently asked for a divorce, saying she was taking the house and my retirement. My question is: Does the fact we paid off her debts she held before get spread evenly? Had I not paid all of her debts our net worth would be near the same with a better outcome for me.

We’ve only been married a few years, and frankly I can’t help feeling taken advantage of. The only advice I can find discusses whose responsibility the student loans would be, but now it just seems that she got me to pay all of her debts, and got some new stuff, while I threw away years of my life.

Please tell me there’s hope.

Florida Divorce and Student Loans

Is there hope for Market Watch’s husband?

I’ve written about student loans in the past. Florida is an equitable distribution state. The initial premise behind an equitable distribution of marital assets and liabilities – such as student loans – is equal distribution.

However, when proper justification is shown, a family court judge may make an unequal distribution.  The burden is difficult. A distribution of marital debts, whether equal or unequal, must be supported by factual findings and based on substantial competent evidence. The rationale for the distribution also has to be disclosed by the judge.

As a general proposition, student loan debt incurred during the marriage is a marital liability. So, in the absence of findings supporting the unequal distribution of a student loan debt, marital student loan debts must be equitably distributed between the parties.

The fact that the husband will not receive any benefit from his ex-wife’s education because of the divorce is not a factor to be considered when allocating a marital debt for student loans.

In sum, absent some other justification for an unequal distribution, controlling case law in Florida will usually prohibit a family court judge from awarding student loan debt incurred during the marriage solely to one party or the other.

Out of Luck?

As Market Watch reports, divorce after two years is a tough break, “especially given all the help you gave your wife with her student debt. That’s a particularly unusual kind of debt, in that it’s virtually impossible to discharge.”

The article concludes by noting that “[t]he best thing you have going for you right now is your honest intentions going into this marriage and your (good) behavior throughout. Having examined all the details, the judge may not be able to say the same thing about your wife.

The Market Watch article is here.

 

Divorce and Student Loans

Posted by Ron Kauffman on

According to a recent survey, borrowers with student loans have been found to take on more debt, are more likely to divorce, and that just holding student loans can be a contributing factor in some divorces.

divorce student loans

Recent Study

Money problems are usually an indicator of divorce. Since student debt can constitute a major financial strain, it can impact a marriage. This new survey underscores the importance of minimizing your debt.

The survey showed that:

  • The average Class of 2017 graduate walked away with a diploma and $39,400 in debt; and
  • The 2017 graduate’s debt represents a 6% increase from the previous year; and
  • Americans owe $1.48 trillion in loans.

It’s clearly taking a toll – not just on finances – but on marriages. This new survey reveals that these loans could increase your likelihood of getting divorced. According to a new study, 58% of divorcees with student loans took on debt to help pay for attorney fees and other related costs during their divorce proceedings. Compare that with 48% percent of all divorcees who borrowed money to pay for a divorce.

Couples with student loan debt are more likely to delay divorce because of cost. More than a third of respondents with student loans (35%) delayed their divorce because they couldn’t afford it, compared with 24% of couples without student debt.

Florida Divorce and Student Loans

I’ve written about equitable distribution and divorce debt before. While the initial premise behind an equitable distribution of marital assets and liabilities is equal distribution, if there is a proper justification, a family court judge may make an unequal distribution.

As a general proposition, student loans incurred during the marriage are marital debts. And, unless there is a proper justification supporting an unequal distribution of student loans, they must be equitably distributed between the parties.

Sometimes people argue that a spouse won’t receive any benefit from the other spouse’s law school or medical school degree. However, the benefit of an education is not considered a factor the court should consider when allocating a marital debt for student loans.

Survey Says . . .

The survey also had some other sobering results:

  • 13% of respondents who had student loan debt going into their marriage claim that it eventually led to the end of their marriage.
  • Almost 7 in 10 divorcees have changed how they manage their money after their divorce.
  • 36% of borrowers with student loan report they lied to a partner about money.
  • Roughly one third respondents claimed a decreased sex drive because of their student loans.

Large debts and monthly payments can make it difficult to buy a home, save for retirement, or make it from paycheck to paycheck. Worse still, you’re probably stuck with your student loan whether you can afford it or not.

The Survey is here.

 

Divorce and Student Loans

Posted by admin on

On behalf of Ronald H. Kauffman, P.A. posted in Marital Debt on Thursday, April 17, 2014.

You’re married and your Husband is in medical school. The burden of his school divorce is the farthest thing from your mind. Maybe you thought: “they’re his loans anyway, so I won’t be responsible.” You may be in for a big surprise.

The Wall Street Journal recently reported that college students who took out loans to earn bachelor’s degrees in 2012 graduated with an average $29,400 in educational debt. Worse, those earning advanced degrees borrowed even more. What happens to these loans in divorce court?

There are two misconceptions about dividing student loans in a divorce:

1. Student loans taken out before marriage turn into marital debt after the wedding.

2. That student loans incurred during the marriage are the responsibility of the student earning the degree.

In Florida, educational debts are treated as any other kind of debt. If a debt is incurred before a marriage it is considered the separate property of the debtor. And, unless a prenuptial agreement says otherwise, it stays that way after a divorce.

This comes as a surprise for many people. But as the Wall Street Journal reports, think of it this way:

“It’s generally like roommates,” says June Carbone, an expert in family law at the University of Minnesota Law School. “The roommate doesn’t pick up student debt….It doesn’t matter if you’re sleeping together.”

Debt division can get a little trickier when the student loans are taken out during the marriage. Different states may have different laws, so how educational debt is divided may depend on where you live and who benefits from the loan.

In Florida, as a general proposition, student loans incurred during the marriage are marital liabilities, and must be equitably distributed between spouses.

The fact that the Wife will not receive any benefit from the Husband’s medical degree after the divorce is not really a factor when dividing student loans.

What should you do? A prenuptial agreement can help you spell out how you and your future spouse want to allocate student debts in the event of divorce. At a minimum, discuss your finances with your partner.

Most people think prenuptial agreements are for the very rich, and to preserve expensive assets. Don’t forget that there’s often a lot of debt to consider too, and a prenuptial agreement is a perfect tool for addressing that.

The Wall Street Journal article can be found here.