Divorce can take a toll on all parties involved. Not only is it emotionally difficult, but it is financially difficult as well. One important aspect of divorce is the division of marital debt. Many couples wonder if their student loan debt will be divided along with the rest of the debt; however, this type of debt is treated differently than most.
Community Property
California is a community property state. This means that any debts and property acquired during a marriage belong to both parties equally and must be fairly divided between the two. If either party acquired their student loan debt before the marriage, the debt belongs to that party exclusively.
However, if the student loan debt was acquired during the marriage and/or marital funds were used to begin to repay this debt, then the responsibility to close out this debt may belong to either or both parties. This is because marital funds belong to both parties equally. If either party uses marital funds to pay debts such as mortgages, car payments, or credit card bills, then these debts automatically become the property of both parties.
The community property rule does not apply to student loan debts in California. This is because the state considers student loans to solely benefit the party who acquired them and not the married couple.
However, a court may consider the following when determining whether to divide student loan debt:
- The student loan was partially used to cover living expenses such as rent, food, and utilities. If both parties benefited from the debt, then the court is more likely to consider it community property.
- The student loan was exclusively used on education expenses such as classes, books, and supplies. If the party who acquired the debt used it for education, then it only benefited that party and the other party is in no way responsible for it.
- The other party drove the student to school, took care of the home, and solely paid for living expenses while the other received their education. If the other party played a supporting role, the court may consider their responsibility to the debt fulfilled and not divide it.
- The other party co-signed on the loan to help the party receiving their education pay for classes. If the spouses both signed off on the loan, they are equally responsible for ensuring it is paid off in full.
Helping Our Clients Fairly Divide Debts
At Gille Kaye Law Group, PC, our attorneys can help you determine whether your student loans are community property. From there, we will create a divorce agreement that is fair for all parties involved.
To get started, call our firm at (626) 340-0955 or contact us online today.