Will You Have to Pay Your Spouse’s Student Loan Debt After a Divorce?
While no one expects their marriage to end, it is vital to understand how marriage affects your property rights and how those rights will be handled in the event of a divorce. Louisiana is considered a “community property” state, which has significant ramifications for property ownership during and after a marriage. In a community property state, anything acquired during a marriage is considered property of the marriage and will be split 50/50 in the event of a divorce.
All assets and obligations a spouse obtains during their marriage are presumed to be communal property under Louisiana law. Separate property refers to property owned by one spouse prior to the marriage. Separate property also includes assets received as a gift or inheritance during the marriage, or property covered by a prenuptial agreement. A distinct property claim is usually required to be backed up by financial records or other evidence. Through purposeful or unintentional commingling, an asset that was once separate property can become common property (mixing separate and community property).
The surrounding facts around when and why student loan debt was acquired will determine whether or not a spouse is responsible for repayment after a divorce. In most situations in Louisiana, student loan debt is considered marital debt if it was obtained during the marriage. This means that both spouses will be responsible for repayment under the student loan debt divorce agreement.
Louisiana is a Community Property State
The term “community property” refers to a set of rules that govern property ownership and management between married couples. In Louisiana, the default rule is that a married couple is subject to the state’s community property laws, which means all assets and debts incurred during the marriage are split 50/50 during a divorce.
Divorcing couples can decide how to divide their assets and debts by reaching a settlement agreement, or they can leave property distribution to a judge. All debts and assets accumulated during a couple’s marriage belong equally to both spouses, according to Louisiana’s community property laws. When distributing community property, a judge must ensure that each spouse receives equal net worth property.
Who is Responsible for Student Loan Debt After a Divorce in Louisiana?
As with any legal process, it will depend on certain facts and circumstances for who is responsible for the student loan debt. When deciding allocation of student loan debt, the following will typically be considered:
- Did the couple have a prenuptial agreement?
- Is the couple currently residing in a community property state?
- Were both partners co-signed on the loan?
- Were the loans acquired before the marriage began?
- When did the party receive their education and loan?
If a married couple borrows student loans while living in a community property state, the loans are deemed joint obligation of the spouses. When you borrow student loans before getting married or after a formal separation or divorce, you are still responsible for them.
Divorce settlements are a little easier to sort out if you and your spouse have the same amount of student loan debt. You are each responsible for your own student debts and are responsible for making payments. If one spouse has more student loan debt than the other, the couple and their legal counsel will need to work out a plan to divide the debts and assets in order to achieve a balance.
One of the most common misunderstandings about sharing student loan debt is that all debt incurred prior to marriage becomes shared debt after marriage. This is not always the case, however.
Community property debts include student loans taken out during a couple’s marriage. This means that each spouse is accountable for the repayment of the other’s student loan debt. However, according to Louisiana Civil Code 124, a spouse who utilizes community funds to pay off college loans taken out before the couple married must repay the common estate. Prior to marriage, any school loans taken out are regarded as the spouse’s independent debt.
Did You Co-Sign?
If you or your spouse co-signed student debt, even if you are no longer married, the co-signer is still responsible for the debt. This includes co-signing a refinancing loan as well as any school-related debts.
When you co-sign a student loan, you are legally obligated to repay the debt if the principal borrower is unable to do so. However, there are ways to get out of this jam.
If you qualify, you can refinance in your own name; otherwise, look for a lender who accepts co-signers. If you’re refinancing with a co-signer, search for a lender who will release the co-signer quickly.
In any case, you will be free of your former spouse’s debt, or they will be free of your debt.
What if there was a Prenuptial Agreement?
A prenuptial agreement (or commonly referred to as a “prenup”) is a contract that a couple signs before they marry to define how property and debt will be distributed in the case of divorce or legal separation
A prenuptial agreement, for example, can state that student loans taken out for a spouse’s schooling will be treated as separate debt. This will be binding on the couples and it will not matter if the student loan was utilized before or during the marriage. On the reverse, a prenup can also state that all debts incurred at the time of the divorce (whether incurred before or during marriage) are to be deemed community property and split in half.
It will not matter if the state is a community property state or not, prenuptial agreements can overrule state law restrictions. Regardless of where the couple lives, this might provide clarity on the dissolution of a marriage.
Contact Betsy A. Fischer, LLC Today
Divorce is an emotionally exhausting experience. There is also the extra burden of separating all of your assets and debts and deciding who gets what. You might be wondering if you will have to pay off all of your student loan debt on your own or if your spouse will be held responsible for portion of it as well.
If you are going through a divorce and the talk of student loan debts is in question, you need to contact an experienced Louisiana family law attorney immediately. At Betsy A. Fischer, LLC, our divorce lawyers are here to help you through this difficult process. You can contact our office in Metairie at 504-384-7520 to arrange a confidential consultation with attorney Betsy Fischer.